GENEVA, Switzerland, September 21 /PRNewswire-FirstCall/ -- Serono
(virt-x: SEO and NYSE: SRA) has today been informed that Merck KGaA of
Darmstadt, Germany has published the following press release:
    Merck KGaA Announces Acquisition of Serono SA
    - Transaction transforms Merck Ethicals
    - Merck pays CHF 1,100 per share in cash
    - Merck holds 64.5% of Serono capital and 75.5% of the voting rights
    - Public tender offer of CHF 1,100 per share
    Darmstadt, Germany, September 21, 2006 - Merck KGaA announced today
that it has entered into an agreement with the Bertarelli Family, which
owns the majority stake of Serono SA, to purchase their Serono shares to
create a strategically compelling combination with the size to compete in
the global pharmaceutical market.
    Subject to antitrust review and closing of the purchase, Merck holds
64.5% of the capital of Serono and 75.5% of the voting rights, for which
Merck agreed to pay CHF 1,100 per share in cash. Merck will make a public
tender offer under Swiss law for the same price of CHF 1,100 per share. The
offer price represents a 20% premium to the share price as of September 20,
2006, and a total equity value of CHF 16.6 billion (approximately EUR 10.6
billion) on a fully diluted basis.
    "This acquisition transforms Merck's Pharmaceuticals business and
creates a leading position in the world of biologic medicines, which helps
to ensure its future through the 21st century," said Michael Roemer,
Chairman of the Executive Board of Merck KGaA. "Both companies have a
unique opportunity to achieve a competitive advantage through a combined
EUR 1 billion R&D budget and a stronger product portfolio. The companies
are a perfect fit with 28 compounds in development. Together with Serono
management and employees, we will create a world-class biopharmaceutical
company with global footprint, cutting-edge biotechnology manufacturing and
strong growth."
    Ernesto Bertarelli said: "With this transaction we create a combined
business with strong capabilities, especially in neurology and oncology.
Together with Serono, Merck will be a world-class biotechnology company and
a major player in the global pharmaceutical market. This match will allow
Serono's innovative biotech abilities to play an important role in the
future of the combined company while expanding its global reach."
    Strategic Rationale
    Together with Serono, Merck achieves:
    - Critical mass in R&D with an annual budget of approximately EUR 1
billion
    - R&D capabilities greater than the sum of the parts
    - Market-leading Multiple Sclerosis franchise to broaden business
portfolio
    - Expanded geographic reach and access to the U.S. market
    - World-class biotechnology manufacturing
    Merck-Serono Biopharmaceuticals
    Merck's Pharma Ethicals division will be combined with Serono to create
"Merck-Serono Biopharmaceuticals." The headquarters of this business will
be in Geneva, Switzerland. Merck-Serono Biopharmaceuticals' U.S.
headquarters will be in Boston, MA. Based on 2005 figures, the new Merck
Group would have pro-forma sales of EUR 7.7 billion, including EUR 3.6
billion in biopharmaceutical sales. The Merck Group will have a total
number of about 35,000 employees. Merck's successful business model of
competing in both pharmaceuticals and chemicals will remain in place and be
strengthened by this combination.
    Strong financial profile and significant value creation
    The acquisition will be funded initially through existing Merck cash
and a bridge financing. The all-cash transaction will be refinanced through
a combination of a syndicated loan, a bond and a capital increase of EUR 2
to 2.5 billion, in which the Merck Family will participate with an amount
of up to EUR 1 billion. Merck is committed to retaining its
investment-grade rating and expects a rapid deleveraging driven by a strong
operating cash flow. Merck expects the transaction will have a positive
impact on adjusted earnings per share (before transaction related charges
and one time restructuring costs).
    Offer Details
    The offer is subject to the customary conditions, including the receipt
of antitrust clearances and the closing of the transaction with the
Bertarelli family. Full details of the conditions will be disclosed in the
offer document. The transaction is expected to close in early 2007.
    Important Information
    The information contained in this press release is neither an offer to
acquire nor an invitation to sell or make an offer to sell securities
(especially shares or American depositary shares of Serono SA). The offer
document for the public tender offer will presumably be published in
November 2006. Only the conditions contained in this offer document will be
decisive.
    No Offer will be made in the United States of America
    The offer will not be made to, and Serono shares will not be accepted
from, holders of Serono shares in the United States and no offer will be
made for Serono ADRs/ADSs. This communication is not an extension of the
offer in the United States.
    Forward-looking statements
    Merck
    The information in this document may contain "forward-looking
statements." Forward-looking statements may be identified by words such as
"expects", "anticipates", "intends", "plans", "believes", "seeks",
"estimates", "will" or words of similar meaning and include, but are not
limited to, statements about the expected future business of Serono SA and
of Merck KGaA resulting from the proposed transaction.
    These statements are based on the current expectations of management of
Merck KGaA and E. Merck OHG, and are inherently subject to uncertainties
and changes in circumstances. Among the factors that could cause actual
results to differ materially from those described in the forward-looking
statements are factors relating to satisfaction of the conditions to the
proposed transaction, and changes in global, political, economic, business,
competitive, market and regulatory forces. Merck KGaA and E. Merck OHG do
not undertake any obligation to update the forward-looking statements to
reflect actual results, or any change in events, conditions, assumptions or
other factors.
    Serono
    Some of the statements in this press release are forward looking. Such
statements are inherently subject to known and unknown risks, uncertainties
and other factors that may cause actual results, performance or
achievements of Serono S.A. and affiliates to be materially different from
those expected or anticipated in the forward-looking statements.
Forward-looking statements are based on Serono's current expectations and
assumptions, which may be affected by a number of factors, including those
discussed in this press release and more fully described in Serono's Annual
Report on Form 20-F filed with the U.S. Securities and Exchange Commission
on February 28, 2006. These factors include any failure or delay in
Serono's ability to develop new products, any failure to receive
anticipated regulatory approvals, any problems in commercializing current
products as a result of competition or other factors, our ability to obtain
reimbursement coverage for our products, the outcome of any government
investigations and litigation. Serono is providing this information as of
the date of this press release, and has no responsibility to update the
forward-looking statements contained in this press release to reflect
events or circumstances occurring after the date of this press release.
    About Merck
    Merck is a global pharmaceutical and chemical company with sales of EUR
5.9 billion in 2005, a history that began in 1668, and a future shaped by
29,958 employees in 55 countries. Its success is characterized by
innovations from entrepreneurial employees. Merck's operating activities
come under the umbrella of Merck KGaA, in which the Merck family holds a
73% interest and free shareholders own the remaining 27%. In 1917 the U.S.
subsidiary Merck & Co. was expropriated and has been an independent company
ever since.
    About Serono
    Serono is a global biotechnology leader. The Company has eight
biotechnology products, Rebif(R), Gonal-f(R), Luveris(R), Ovidrel(R
)/Ovitrelle(R), Serostim(R), Saizen(R), Zorbtive(TM) and Raptiva(R). In
addition to being the world leader in reproductive health, Serono has
strong market positions in neurology, metabolism and growth and has
recently entered the psoriasis area. The Company's research programs are
focused on growing these businesses and on establishing new therapeutic
areas, including oncology and autoimmune diseases.
    In 2005, Serono, whose products are sold in over 90 countries, achieved
worldwide revenues of US$2,586.4 million. Reported net loss in 2005 was
US$106.1 million, reflecting a charge of US$725 million taken relating to
the settlement of the US Attorney's Office investigation of Serostim.
Excluding this charge as well as other non-recurring items, adjusted net
income grew 28.4% to US$565.3 million in 2005. Bearer shares of Serono
S.A., the holding company, are traded on the virt-x (SEO) and its American
Depositary Shares are traded on the New York Stock Exchange (SRA).
    Note to Editors:
    Merck cordially invites journalists to attend a press conference at 3
p.m. today in the company headquarters, Frankfurter Strasse 250, Darmstadt,
Germany. Registration is not required. The press conference presentation,
as well as the question-and-answer session, will be available live on the
Merck website - http://www.merck.de. The press conference will be conducted in
German with simultaneous translation into English. All Merck Press Releases
are distributed by e-mail at the same time they become available on the
Merck Website. Please go to http://www.subscribe.merck.de to register
online, change your selection or discontinue this service.

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