Schering rejects Merck's KGaA takeover offer
takeover offer of €14.6 billion ($17.4 billion), claiming the deal
undervalued the company.
The €77 ($91.82)-per-share offer was formally announced Monday, but Schering had already rejected it when reports surfaced on Sunday.
"After the information about the approach became public, the Executive Board of Schering stated that this offer significantly undervalued Schering and its prospects as an independent specialised pharmaceutical company," the company said in a statement.
Schering also confirmed that the approach was unsolicited and that no negotiations were ongoing with >Merck.
Merck had made the takeover offer to Schering shareholders, who would've created a pharmaceuticals and chemicals company that could've become the world's fifth largest spender in total terms.
The takeover, if successful, meant the combined company would have had a pharmaceutical pipeline of 16 projects that Merck said were 'world class'.
In addition, annual sales of the new company would surpass those of Bayer, currently Germany's largest publicly listed pharmaceutical company, as well as larger than Boehringer Ingelheim, the world's largest privately held company.
In a press conference held at Merck's German headquarters, it's chief financial officer Michael Becker said he expected little resistance to the cash offer of €77 per Schering share, which represented a 35 per cent premium to the three-month average unaffected share price and 24 per cent more than the unaffected share price.
"We do not have the impression that any of the major shareholders are against the bid," Becker said.
Chairman of the Merck Executive Board, Michael Roemer, revealed that Merck, which currently holds 4.98 per cent of Schering had not been in talks with any other shareholders. Allianz , holder of 11 per cent in Schering, declined to comment today on the offer.
Merck's decision to take over Schering is one with the oncology field in mind and is an area in which Merck has traditionally been strong. Merck said it believed that its highly successful Erbitux franchise had significant near-term growth potential, which the Schering purchase would bolster.
Schering's gynaecology and andrology franchise, including Yasmin, an oral contraceptive worldwide, is expected to provide the combined pharma business with consistent revenue growth and new product launches.
The two companies together could build a Central Nervous System franchise around Schering's multiple sclerosis product, Betaferon, and the potential launch of Merck's Phase IIIl product for Parkinson's disease patients, Sarizotan.
Commenting on the overall business strategic fit of Schering into Merck, Elmar Schnee, head of Merck's pharma business said, "the transaction had two important advantages. We strengthen our ethical (innovative drugs) division, and we get a clear increase in our sales force and in our research division that will make us competitive in a global context."
"The new size will be of optimal size," Shnee said. "It will be big enough in the global competitive market, without being too large."
The acquisition would also bring Merck more clearly into the playing field in terms of innovative drugs. Currently the company is the world's third largest generics drugs maker.
