Merck KGaA moves to scupper Schering/Bayer marriage?

In moves that started June 8/9, and which have been called "incomprehensible" by drugs and chemicals company Bayer, fellow German group Merck KGaA has been busy building up a strong equity position in Schering AG, in what looks like an attempt by Merck to stop the agreed takeover of Schering by Bayer (Marketletters passim).

It will be recalled that Merck's hostile 77.00 euros a share takeover bid for Schering in March was rejected and Bayer came in with a "white-knight," 16.5 billion-euro ($21.4 billion) - or 86.00 euros per share - rescue offer that was accepted by the former's board, while Merck's Darmstadt-based board said it would not increase its price. The acquisition has been cleared by all the regulatory authorities, and the deadline for shareholder acceptance has been extended to June 14, but this last date cannot be pushed forward again.

By close of trading on June 9, Merck had reportedly acquired 18.6% of Schering's shares, a significant increase on the around 5% it held ahead of announcing its takeover intentions. For its part, Bayer also went on a buying spree, acquiring 23.09% of Schering stock on the open market, bringing the total number of shares it owns, or has been tendered, to 61.52%. However, Bayer's offer stipulates a minimum of 75% shareholder takeup so, with only a short time to go before the tender closes, Merck's action could still scupper the deal.