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June 11, 2006
What's German For "Food Fight"?
As those who follow the drug industry know, Bayer has been making an offer to acquire Schering AG of Berlin. This was after Merck KGaA (Darmstadt) had made a bid, which Bayer topped. They're trying to get 75% of the shares pledged, but it's been a hard slog. Many large investors seem to be hanging back, hoping for a bigger payout later on (as has happened in some other European takeover deals), and Bayer ended up extending the deadline to tender shares.
But on Friday of last week, Merck suddenly upped periscope and fired bow tubes. They filed paperwork with the SEC that they'd exceeded the 10% regulatory threshold of ownership of. . .Schering AG. They'd been out quietly buying the shares on the open market, apparently, and their statement said something about "protecting their investment".
The best German word for the reaction to this news is bestuerzung, translated into English as "consternation" or "dismayed confusion". Bayer issued a statement calling Merck's actions "incomprehensible", and pointing out that Merck was paying a price per share that they'd already dismissed as too high. So it'll be interesting to hear everyone's reaction to the latest news: Merck now says that they have 18.6% of Schering, and Bayer says that they're up to 61.5%.
It's fair to say that things like this don't usually happen in the German industrial world, so no one really knows how to deal with this one. Bayer's latest deadline is Wednesday the 14th, and if those figures are accurate, only about 20% of Schering AG shares are unaccounted for. Might as well start the popcorn popper and open a cold drink, and sit back to watch the show.
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