Bayer wins in Schering battle as Merck pulls out

15th June 2006, Comments 0 comments

15 June 2006, BERLIN - German pharmaceutical giant Bayer AG emerged Wednesday as the victor in the battle for control of Schering AG after Merck KGaA announced that it was selling its 21.8 percent stake in the Berlin-based drugs group to Bayer. In addition to an offer of 3.7 billion euros (4.8 billion dollars) for its 41.5 million Schering shares, Merck also received a commitment from Bayer, inventor of aspirin, to explore possible areas of cooperation amid growing pressure in the pharmaceutical industry t

15 June 2006

BERLIN - German pharmaceutical giant Bayer AG emerged Wednesday as the victor in the battle for control of Schering AG after Merck KGaA announced that it was selling its 21.8 percent stake in the Berlin-based drugs group to Bayer.

In addition to an offer of 3.7 billion euros (4.8 billion dollars) for its 41.5 million Schering shares, Merck also received a commitment from Bayer, inventor of aspirin, to explore possible areas of cooperation amid growing pressure in the pharmaceutical industry to consolidate.

The recent surprise move by Darmstadt-based Merck to build up a stake in Schering threatened to derail Bayer's over-16-billion-euro bid for Schering, the world's largest manufacturer of contraceptive pills.

Merck's stake took it close to a blocking minority of 25 percent with its decision to sell out coming on the eve of the expiry of Bayer's bid at midnight Wednesday.

"We're very pleased about Merck's decision, because a lengthy competitive bidding process would have greatly affected Schering's future," said Bayer chief Werner Wenning. "All three companies concerned will benefit from this step," he said.

Bayer is to also withdraw legal action it launched against Merck in New York this week.

With family-owned Merck failing to spell out the strategy behind its accumulation of Schering shares, Bayer was forced into the market in recent days to try to build up its holding and attempt to rescue its bid.

The sale of Merck's shares in Schering for 89 euros each, which followed a meeting between the three companies, allows Merck to book a one-off gain of 400 million euros during its second quarter. Bayer is offering 86 euros a share for Schering.

The Bayer bid, which was the biggest in the company's 140-year-old history when launched in March, forced Merck to abandon its hostile 14.6-billion takeover offer for Schering launched a few weeks earlier.

News that the Schering takeover battle had drawn to a close resulted in Bayer shares racing ahead by about 8 percent to 33 euros.

While Merck shares jumped more than 5.6 percent to 72.30 euros, Schering's stock climbed another 2 percent to 88.96 euros.

DPA

Subject: German news

0 Comments To This Article