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GERMAN pharmaceutical and chemical company Merck has agreed to buy US biotech and laboratory supply company Millipore for $7.2b.

Millipore, which sells laboratory supplies for researching and developing drugs and equipment for making and processing drugs, will retain its headquarters in Billerica, Massachusetts once its shareholders have approved the deal, which if successful is expected to close in the second half of 2010. Merck expects to make annual $100m synergy savings beginning three years after the deal has closed.

The $7.2b price tag includes net debt and is a 13% premium on Millipore’s closing shareprice on 26 February. Merck predicts that by adding Millipore to its chemicals business, the unit will generate 35% of company revenue – up from 25% today.

Merck chairman Karl-Ludwig Kley says “This is a combination with an excellent strategic fit, which will allow us to cover the entire value chain for our pharma and biopharma customers, offering integrated solutions beyond chemicals.”

The deal, which scuppers a reported $6b takeover attempt by fellow laboratory supplier Thermo Scientific, is indicative of the ongoing consolidation in the pharma sector. Major players are snapping up new sources of revenue to ease the pressure as generic producers and the expiring patents for blockbuster drugs erode profit.