Merck launches hostile bid for rival Schering

13 March 2006

The Darmstadt-based German pharmaceutical major Merck today confirmed having mounted a €14.6-billion hostile bid on Berlin-based drug rival Schering. The bid offer places the value of Schering's stock at €77, approximately 15 per cent over its Friday's close price.

Scherring's shares surged by 21.8 per cent to €81.35 the news of the bid by Merck, the world's largest contraceptive pills maker. Merck's shares fell by 1.3 per cent to €82.62 after it announced its offer to buy Schering, which is the world's largest manufacturer of contraceptive pills, apart from a portfolio of oncology and cardiac products.

If the deal materialises, Merck would become the second-largest pharmaceutical in Germany behind Bayer, which manufactures aspirin - a merged entity would have combined sales of €11.2 billion. The combined company's enlarged product pipeline would comprise over 30 projects in clinical development. Both companies are of similar size in terms of turnover and profit and together they made net profit of €1.3 billionn last year on combined annual sales of over €11 billion.

Merck, which is majority owned by the Merck family, said it expects annual synergies of about €500 million with the amount rising after 2009. The Merck family intends to invest €1bn of equity to help fund the acquisition. Merck will also issue €500 million to €4 billion of new shares to fund the deal.

The deal is conditional on investors with at least 51 per cent of Schering accepting the offer.

While Michael Roemer, chairman, Merck has called it an "ideal merger" for both companies, Schering's chief Hubertus Erlen rejected the offer, stating that it was too low.