Bayer Makes Peace with Merck KGaA to Win Schering AG

The ongoing battle between Bayer AG (Leverkusen, Germany, www.bayer.com) andMerck KGaA (Darmstadt, Germany, www.merck.de) in their respective quests toacquire Schering AG (Berlin, Germany, www.schering.de) was resolved this week, withMerck KGaA agreeing to sell its 21.8% stake in Schering to Bayer.

The agreement follows a lawsuit filed by Bayer against Merck KGaA,which is now being withdrawn. Merck KGaA began buying shares ofSchering AG in late May and early June to raise its stake in thecompany, a move that might potentially have enabled it to block Bayer'sacquisition of Schering AG. Bayer had a June 14 deadline to acquire atleast a 75% stake in Schering AG. Bayer had filed a lawsuit on thegrounds that Merck KGaA had failed to disclose its strategic intentionsin violation of US law, "leaving investors and parties to the takeoveruncertain as to that company's objectives," said Bayer in a companyrelease.

"We're very pleased about Merck's decision because a lengthycompetitive bidding process would have greatly affected Schering'sfuture," said Bayer management board chairman Werner Wenning, in acompany release. "All three companies concerned will benefit from thisstep."

In winning the battle for Schering AG, Bayer raised its offer price forthe company to 89 euros per share for a total purchase price of 16.9billion euros ($21.3 billion). Bayer had earlier bid EUR 86 per shareor EUR 16.5 billion ($20.8 billion) for Schering in a friendly takeoverbid in April, trumping a hostile takeover bid by Merck KGaA of EUR 77per share in March.