US drugs-giant to acquire Akzo Nobel’s Organon for $14.4 billion

Schering-Plough, the leading US drugs firm, has agreed to buy Akzo Nobel NV’s drugs unit Organon BioSciences for $14.4 billion in a bid to gain scale and diversify away from cholesterol medicine. The cash sale has marked last-minute reversal of Akzo’s earlier plan to float Organon on the stock market. This mover however was a surprise for the financial market that fueled further takeover speculation in the industry. The offer represents 37 percent more than Organon’s value would have been in a stock sale. Stocks of Akzo, based in Arnhem, shot up quickly following the announcement to their highest level in five years. The decision also helped raise share prices in chemical company ICI as investors speculated that Akzo Nobel would use the cash from the sale of Organon to acquire the British company. Analysts have argued that that the agreement made sense for both firms, adding that it would be more profitable than an earlier plan to list Organon on the stock exchange. In addition to it, the company in its official statement has said, ‘the money from the Organon sale will help finance Akzo’s growth strategy, reduce pension liabilities and debt and pay for a share buyback worth about 1.3 billion euros ($1.7 billion)’. Schering-Plough further stated that the transaction, which is expected to be concluded by the end of the year, should add about 10 cents per share to earnings in the first full year, after costs and adjustments. The company also hopes to achieve $500 million in synergies from the deal over three years.