Merck launches bid for Berlin drug firm Schering
13 March 2006, DARMSTADT, GERMANY - Shares in Berlin-based drug company Schering soared by 21.8 per cent to 81.35 euros (97 dollars) Monday after rival German pharmaceutical group Merck launched a hostile bid for the company.
13 March 2006
DARMSTADT, GERMANY - Shares in Berlin-based drug company Schering soared by 21.8 per cent to 81.35 euros (97 dollars) Monday after rival German pharmaceutical group Merck launched a hostile bid for the company.
But Merck's 14.6-billion-euro merger plan was overshadowed by the announcement by Germany's financial watchdog (BaFin) that it was undertaking a probe into trading in Schering shares after they leapt by about 10 per cent last week before the takeover bid was publicly known.
"We will look to see if the procedure was routine," said BaFin spokeswoman Anja Neukoetter, who went on to say that if any irregularities were discovered it would trigger a formal investigation into possible insider trading.
The Merck offer values Schering shares at 77 euros, which was about 15 per cent more than Friday's closing price.
Despite the BaFin probe, Merck remained upbeat that its bid would succeed.
"This is an ideal merger for both companies," said Merck's chief Michael Roemer, with analysts seeing a fusion between the two groups as helping to bolster their global market strength.
"It provides the companies with the unique opportunity to take a quantum leap and become more competitive and continue to thrive in the consolidating global pharmaceuticals industry," said Roemer.
Schering has rejected the Merck offer. "There are no negotiations with Merck," said a Schering spokesman Monday.
However, Merck executives appeared confident that the Berlin-based company would eventually give up its resistance.
"We are completely convinced that the Schering board sooner or later will recognize the attractiveness of the offer," said Merck finance chief Michael Becker.
But analysts also believe that the Merck offer could result in other groups launching takeover moves leading to a bidding war to buy Schering.
Merck has been building up a stake in Schering and already owns 4.98 per cent of its rival.
The Merck bid comes in the wake of a series of high-profile takeover moves by corporate Germany including in the energy, chemicals and steel sectors following a buoyant performance by German stocks.
Merck's shares fell by 1.3 per cent to 82.62 euros after it unveiled the offer to buy Schering, which is the world's biggest manufacturer of contraceptive pills.
Based on the latest year's figures, a merged Merck-Schering group would have combined sales of 11.2 billion euros and would forge Germany's second biggest drugs group.
"With the merger we will be able to withstand the tough global competition with other pharmaceutical companies," said a leading Merck executive, Elmar Schnee.
Merck, which is majority-owned by the Merck family, said it expects annual synergies of about 500 million euros.
Both firms have roughly the same size workforce. While Merck, which is known for its cancer and heart disease medications, has about 29,000 employees, Schering has about 25,000.
Roemer declined, however, to say whether the merger would result in job cuts. "Naturally it will come to certain ranges in reductions," he said.
But Merck supervisory board Chairman Wilhelm Simson ruled out breaking up the Berlin-based Schering in the event of a successful bid.
"A breakup would be absurd," Simson said, with Merck saying that the two groups' business would compliment each other.
Simson said that the two groups had held discussions but had not brought the desired result from Merck's point of view.
Subject: German news