Bayer’s Schering AG takeover ‘expected to fail’

Bayer’s acquisition of Schering AG is now expected to fail because Merck KGaA’s increasing stake in Schering AG now makes it unlikely that Bayer will receive the 75 per cent approval from Schering AG shareholders needed to complete the acquisition.

Merck KGaA has increased its stake to over 18 per cent, which may be enough to block Bayer’s takeover. Schering had previously rejected a hostile takeover bid from Merck in favour of a friendly and recommended acquisition bid from Bayer. However, analysts have said they are unsure of Merck’s intentions by blocking Bayer’s deal.

Silke Stegemann, analyst at Landesbank Rheinland-Pfalz told Reuters Health: “Either the deal will collapse or there could be an agreement between Merck and Bayer. It could be that Merck just wants to be part of a new German pharma powerhouse”

The news agency stated that WestLB analyst, Oliver Kaemmerer, wrote in a research note: “If Bayer fails and is not pursuing a second bid, Merck might increase its stake to 30 per cent and make a mandatory offer to all outstanding Schering shareholders.”

Sarah Kiley of UBS said that Merck may continue buying into Schering and that Bayer would be forced to make a new bid, according to the Dow Jones Newswires.

Schering AG’s had recommended Bayer’s offer to its shareholders. However, Bayer had to extend the approval deadline by two weeks to allow more time for this to happen. Under German law, after one alteration to any merger offer, no further changes to the offer are allowed.

This allowed Merck time to buy into Schering and potentially block Bayer’s bid for its own purposes.

Neither Merck nor Bayer have commented officially on their bids since the announcement was made that the offer period had been extended

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