Merck KGaA Acquires Avecia's OLED and Polymer Electronics Units

Business Wire, Feb 8, 2005

DARMSTADT, Germany -- Merck KGaA and Avecia of Manchester, U.K., announced today that Merck has acquired the OLED (organic light-emitting diodes) materials and the polymer electronics businesses of Avecia for EUR 50 million in cash. The transaction, which is subject to regulatory approval and approval by E. Merck OHG, is expected to be completed during the first quarter of 2005.

The acquisition includes Covion Organic Semiconductors GmbH in Frankfurt, Germany, a leader in the design, development and manufacture of high quality OLED materials. It also includes Avecia's polymer electronics research and development activities based in Manchester.

Both the Covion OLEDs and the polymer electronics activities will be integrated into Merck's Liquid Crystals Division. Approximately 100 employees in these two units will transfer to Merck upon completion of the sale.

"It is apparent that liquid crystal displays will be the dominant flat-panel technology for some years to come," Merck Chairman Bernhard Scheuble said. "During 2004, Merck further strengthened its world-market leadership position in liquid crystals, especially for the most promising high-end television applications. We see this acquisition as an opportunity to explore alternative technologies for the future, which is a prudent step for any market leader."

Jeremy Scudamore, Avecia Chief Executive Officer, said: "Merck is a leading supplier of organic materials for LCDs with an excellent infrastructure service for the flat panel displays market. The company is, therefore, ideally positioned to take these new technologies forward to the next stage of their development."

While Covion is mainly focused on developing future applications for OLEDs, it also manufactures OLED materials for commercial applications. Covion had sales of approximately EUR 8 million in 2004. It was formed in 1999 by Avecia and Aventis Research & Technologies and was fully acquired by Avecia in 2002. Covion's manufacturing and R&D operations are located in the Hoechst Industrial Park in Frankfurt.

OLEDs are extremely thin semi-conducting organic polymers suitable for a wide variety of applications, including light sources and displays. They are made by placing a series of organic thin films between two conductors. When electric current is applied, they emit light.

Polymer electronics will increasingly be used in applications such as solar cells, organic TFTs (thin film transistors), RFID (radio-frequency identification) tags, and other high-tech products.

Merck is the world's leading maker of liquid crystals used in flat panel televisions, computer monitors, laptops, cell phones and other display applications. Within its Liquid Crystals Division, it is already investigating the future potential of OLEDs. In December, Merck acquired the OLED research and development project of Schott AG of Mainz, Germany, to further investigate lighting applications. Merck also has its own polymer electronics research and development laboratory in Chilworth, U.K.

About Avecia

Avecia is a leading privately-owned specialty chemical company with key locations in the UK and USA. The Company operates in two divisions where it holds leading industry positions - Biotechnology and Chemicals (incorporating Pharmaceuticals, Fine Chemicals and Electronic Materials).

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Merck is a global pharmaceutical and chemical company with sales of EUR 7.2 billion in 2003, a history that began in 1668, and a future shaped by 28,300 employees in 56 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 74% interest and free shareholders own the remaining 26%. The former U.S. subsidiary, Merck & Co., has been completely independent of the Merck Group since 1917.