Bayer tops Merck KGaA's bid for Schering AG to create German drug heavy-weight

Following swiftly on Merck KGaA's 77 euros per share hostile bid for fellow German drugmaker Schering AG, late on March 23, Bayer stepped in with a "friendly" 86-euro-a-share offer. The proposed transaction values the company at 16.3 billion euros ($19.84 billion), is 12% higher than the Merck offer and a premium of 39% on Schering's share price before Merck's move. The counter offer was welcomed by investors, with Schering's share price rising 4.7% and Bayer's 1.3% the next day.

At around mid-day on March 24, Merck issued a statement saying that it will not increase its offer for Scherng, even though it is still convinced that a combination would have been a good option for both companies.

The combination, which the Schering executive board has said it supports, would "create a new international heavy-weight," Arthur Higgins, chairman of the board of management at Bayer HealthCare, told the Marketletter. Although reluctant to question Merck's position, Mr Higgins stressed that a Bayer/Schering combination was a "different proposition," offering "so much more scale and opportunity for synergies."