Germany’s Merck to sell generics unit to Mylan

German drug maker Merck announced Sunday that it was selling its generic drug business to Mylan Laboratories Inc. in Pennsylvania for $6.6 billion.

The deal frees Darmstadt-based Merck to concentrate on its core pharmaceutical and chemical activities while allowing Mylan, a generic drug maker based in Canonsburg, to expand its global reach.

Merck said that the two companies “signed a share purchase agreement whereby Mylan will acquire all Merck Generics companies throughout the world.” It expects the transaction -- which requires regulatory approval -- to close in the second half of 2007.

Merck, founded as a pharmacy in 1668, is the oldest pharmaceutical business in the world. It has been entirely separate from New Jersey-based Merck & Co. since the end of World War I.

Merck said the generic drug unit had sales of $2.4 billion and operating profit of more than $500 million last year..

“The fit between our two companies is truly outstanding,” said Robert J. Coury, Mylan’s vice chairman and chief executive. He said the Merck unit “provides us with leading positions in many of the world’s other key regions” to add to Mylan’s strong position in the U.S. market.

The deal follows Mylan’s recent acquisition of 71% of India-based drug ingredient maker Matrix Laboratories for more than $700 million. Merck said this year that it was amenable to a sale of the generics division.

Last year, Merck chased rival German drug maker Schering but was outbid by Bayer. It then bought Swiss biotech company Serono for $14.3 billion to expand its range of drugs and share of the global biotechnology market.

Selling its generics unit would lower Merck’s debt after that acquisition. The unit accounted for 29% of its sales and 28% of its operating profit in 2006.