Schering backs merger with Bayer
pharmafile | March 24, 2006 | News story | Sales and Marketing |Â Â Â
The management of Schering has unveiled a surprise merger deal with fellow German pharmaceutical company Bayer, in a move designed to trump a hostile takeover from another German firm, Merck KGaA.
The hostile takeover bid was launched by Merck less than two weeks ago, in a move to create a new German super pharma company to compete with the industry's biggest corporations.
But Bayer has now stepped in with a superior cash offer, and looks set to win the battle for Schering.
Bayer is already Germany's biggest pharmaceutical company, and enjoyed sales growth of 27% in 2005, largely thanks to the acquisition of Roche's OTC business.
The Leverkusen-based company says it wants to continue its rapid growth through the acquisition of Schering to create a leading pharma company with a focus on a number of specialised therapy areas.
Bayer has put forward a cash bid for control of Schering, which it hopes will persuade major shareholders to sell their stakes in the company to create a major new player in the sector.
Bayers offer of E86 a share is considerably higher than Mercks E77, and represents a 29% premium on Schering's current market value.
Announcing the proposed merger, Schering's chairman Dr. Hubertus Erlen recommended the deal to shareholders: "The price of E86 per share in connection with several other important commitments is a good offer. Joining forces of Schering and Bayer will form a leading specialised pharmaceutical company.
"Both businesses are complementary and follow the same strategy. Together they will be even more competitive internationally."
Bayer's chairman Werner Wenning said the merger would substantially strengthen the Bayer Healthcare division, already the company's main engine for growth.
"We are convinced that merging the two companies will create a health care heavyweight of international standing with a strong market position based on an innovative product portfolio and a well-stocked pipeline," said Wenning.
"We believe this merger to be an appropriate, compelling and value-creating step which will also benefit our stockholders, employees, customers and patients. It is also the best way of reasserting the importance of Germany as a pharmaceutical industry base," he added.
Germany's pharmaceutical industry is the oldest in the world, but has failed to keep pace with its foreign competitors, either through growth or mergers and acquisitions.
The world's top three pharmaceutical companies all have strong links to national identities – Pfizer's heritage is American, GlaxoSmithKline is British (in tax terms at least) and Sanofi-Aventis is predominantly French.
The proposed company would be called Bayer Schering and would have its headquarters in Berlin, a symbolic gesture intended to secure political backing for the merger.
