Successful bond issue Audited

Due to the acquisition of Millipore, extensive financing measures were taken in 2010. A major component of the acquisition financing was a bond issue amounting to EUR 3.2 billion. This was the largest euro-bond transaction by a German company in Europe in 2010.

Merck benefited from attractive conditions as a result of the timing of the issue in March. In order to reach diverse investor groups and due to the high demand, the bond issue was structured into three tranches, each with different maturities. As a result, the maturities fit in well with Merck’s overall bond profile.

The first tranche has an original term of two years. The volume is EUR 500 million and pays a coupon of 2.125%. The other two tranches each amount to EUR 1,350 million. One of these tranches runs until March 2015 and pays a coupon of 3.375%. The third tranche has a term of ten years, paying a coupon of 4.500%.

Since the financing measures for the Millipore acquisition have led to higher debt, the two rating agencies Standard & Poor’s and Moody’s revised their ratings. While Standard & Poor’s issued a rating of BBB+ with a stable outlook on March 2, 2010 (previously: A-), Moody’s adjusted its rating on July 16, 2010 from A3 before the acquisition to Baa2 (stable outlook).

The financing measures have shown that Merck is an esteemed issuer in the capital market. Going forward, the debt market will continue to represent a major element of our corporate financing activities.