Ariel International Fund on Merck KGaA

Ariel bought Merck KGaA because it believes a recovery in biopharma spending is underway after a prolonged period of destocking and funding constraints. The most important inflection is in Process Solutions, a mission-critical biologics manufacturing business with recurring revenue, deep customer integration and high switching costs. Improving orders support the near-term outlook, while the fund believes the current valuation underestimates both Merck's competitive position and improving earnings trajectory.