06/14/2006

Schering Takeover

Bayer Pays a High Price to Beat Merck

The way is now all clear for pharma giant Bayer's takeover of Berlin's Schering. Bidding rival Merck has thrown in the towel and decided to sell its Schering shares to Bayer -- at hefty premium.

Bayer has succeeded in its takeover bid for Schering.

DPA

Bayer has succeeded in its takeover bid for Schering.

Bayer is to purchase Merck's complete Schering share package at €89 per share, the Leverkusen company announced. The two companies have agreed to the deal whereby Bayer is to pay €3 more per share than the €86 it had originally offered the Schering shareholders.

Merck, which is based in Darmstadt, confirmed that it intends to sell its stake of 21.8 percent of Schering to Bayer thus clearing the way for a take over. The value of the transaction will yield Merck a profit of €3.7 billion. Bayer shares jumped by almost 6.7 percent to €32.60 and Merck shares increased by 6.3 percent to €72.76. Schering's own shares rose by over 2 percent to €88.99.

The latest development heralds the end of an unusually aggressive takeover bid by German standards. Merck fired the opening shot when it made a move for a hostile takeover of Schering. Bayer then appeared as a white knight, coming to Schering's rescue by outbidding Merck. However, Merck would not accept defeat and over the last few days the company bought up a massive amount of Schering shares on the open market. Merck almost managed to reach a blocking interest of 25.1 percent.

Bayer was taken by surprise by the maneuver and only filed a lawsuit against Merck in the US on Tuesday. It now plans to withdraw the case, as part of the takeover deal.

The decision came after all three companies held joint talks about Merck's actions over the last few days. "We're very pleased about Merck's decision, because a lengthy competitive bidding process would have greatly affected Schering's future," said Bayer CEO Werner Wenning. The timing was tight for Bayer -- if Merck were still in the picture it would have to have controlled 75 percent of the shares by midnight Wednesday, in order to push through its planned takeover.

smd/spiegel/ap

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