Grin and Bayer it

23 March 2006 By Nina Koeppen

The German conglomerate is acting as Schering’s white knight. Its bid of E86 per share trounces Merck’s hostile offer of E77. Merck will be hard pressed to beat this offer. Bayer has greater synergies with Schering than Merck does.

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Schering has agreed to a E16.3bn cash bid from Bayer. The German conglomerate made the offer after Schering, the Berlinbased drug maker, rebuffed a E15bn takeover offer from Merck, a pharmaceuticals and chemicals group. Merck has not ruled out a counterbid. Bayer's offer is equivalent to E86 per share. Merck had offered to pay E77 per share.

Bayer plans to finance the deal through a combination of: E3bn in existing cash; up to E4bn in equity; the disposal of its H.C. Starck and Wolff Walsrode subsidiaries; and a guaranteed credit line that will later be refinanced.

Bayer is being advised by Credit Suisse and Greenhill.

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