Hoechst Offers $7 Billion For Marion Merrell Dow

Finally confirming the long-running rumor (Marketletters passim), Germany's Hoechst AG has said that it is in discussions with Dow Chemical to acquire its 72% stake (197 million shares) in US drugmaker Marion Merrell Dow. Hoechst's offer is one of $25.75 per share or some $7 billion. Also under discussion is the acquisition of Dow's Latin American pharmaceuticals business for around $200 million.

Hoechst's prime aim in its offer for MMD appears to be that of gaining a bigger foothold in the large US pharmaceutical market, where it currently sells only around 6% of its drug products and holds a market share of less than 1%, while worldwide it is ranked number four.

MMD has been an extremely successful pharmaceutical marketing company, reporting full-year 1994 turnover of $3.1 billion (an increase of 9% on the previous year), but now faces generic competition in its major product lines, and has a bleak-looking near-term new product pipeline. Around 60% of MMD's sales are in the USA, including $296 million from The Rugby Group.