Allen & Overy LLP has advised Merck KGaA on the issue of two hybrid bonds with a total volume of EUR 1.5 billion.

The two bonds are subordinated and have a maturity of 60 years. The first tranche with an aggregate principal amount of EUR 1.0 billion and a coupon of 2.625% p.a. provides for an early redemption option for Merck for the first time after 6.5 years. The second tranche with an aggregate principal amount of EUR 500 million and a coupon of 3.375% p.a. provides for an early redemption option for the first time after ten years. Payment of interest may be suspended if certain conditions are met.

The issue of the hybrid bonds is part of the financing of the planned acquisition of US life science company Sigma-Aldrich, which was announced in September.

The bonds are listed on the regulated market of the Luxembourg Stock Exchange. Banco Bilbao Vizcaya Argentaria, S.A., Barclays Bank PLC, Bayerische Landesbank, BNP Paribas, Citigroup Global Markets Limited, Commerzbank Aktiengesellschaft, Deutsche Bank AG, London Branch, DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main, Goldman Sachs International, J.P. Morgan Securities plc, Landesbank Baden-Württemberg, Landesbank Hessen-Thüringen, Merrill Lynch International, Skandinaviska Enskilda Banken AB (publ), Société Générale, The Royal Bank of Scotland plc and UniCredit Bank AG acted as joint bookrunners.

The Allen & Overy team comprised partner Dr. Oliver Seiler (capital markets) and counsel Dirk Eisel (transaction management) and associate Dr. Alexander Schlee (all capital markets). Partner Dr. Asmus Mihm and associate Katharina Kashishian (both tax, all Frankfurt) also contributed advice.