Merck pays $17 billion for chemical-maker Sigma-Aldrich by Laura Lorenzetti @FortuneMagazine September 22, 2014, 8:20 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons Merck KGaA has purchased Sigma-Aldrich for $17 billion in an effort to expand into the field of chemicals used in the research and development of new pharmaceuticals. Darmstadt, Germany-based Merck will pay $140 a share, a 37% premium over Sigma-Aldrich’s closing price on Friday. The all-cash deal is expected to add to Merck’s earnings immediately, more than doubling earnings associated with life science products, the company said in a statement Monday. Merck also expects to achieve annual savings of about $340 million within three years based on combined synergies. Sigma-Aldrich’s SIAL chemical products are used in research, pharmaceutical manufacturing and diagnostic and testing labs. These items are sold to life science companies around the world to support broader medicine development. The acquisition will help Merck expand into diversified areas as the company has struggled to develop new products within its biotechnology business. The Sigma-Aldrich deal builds on Merck’s 2010 purchase of chemical-maker Millipore Corp. for about $6 billion. “This transaction marks a milestone on our transformation journey aimed at turning our three businesses into sustainable growth platforms,” Karl-Ludwig Kley, chairman of Merck, said in a statement. The combination “will secure stable growth and profitability in an industry that is driven by trends such as the globalization of research and manufacturing.” Currently, chemicals account for 39% of Merck’s revenue, compared to 58% attributed to pharmaceuticals. Its biotechnology company Serono hasn’t developed an approved new drug in nearly 11 years.