Bayer has effectively raised its €16.5 billion take-over offer for Schering after rival Merck snapped up shares in its target, threatening to thwart the bid.
Bayer said today it had paid prices of up to €88 a share to take its stake in Schering to more than 30 per cent - above the current offer of €86 a share.
Bayer has to reach 75 per cent by the end of today for its tender offer to succeed, and would have to pay all shareholders the new higher price.
But Bayer said it was preparing to launch new bid, which would also be at €88 a share, if the tender offer failed. It would be mandatory for Bayer to make a new offer as it now has more than 30 per cent of Schering.
"This means Bayer must make a new offer to all Schering stockholders to acquire the shares they still own because Bayer now holds more than 30 per cent of Schering stock," Bayer said.
Schering shares were up 1.6 per cent at €88.58 by 8:35am, suggesting the market was expecting an even higher offer.
Bayer stock was 0.3 per cent higher at €30.65, while Merck shares were 2.3 per cent up at €70.00 . Bayer said it had chosen to prepare a new offer on the assumption that its German rival Merck would not tender the shares it now owned under the current bid.
It had said today it did not rule out buying Schering stock at a price higher than €86 a share. Merck has raised its Schering stake to 21.8 per cent after purchasing an additional 2.1 million shares at an average price of €86.88 a share.
Merck also said it may continue to buy more Schering shares until the expiration of the Bayer offer or thereafter, depending on the market price and other factors.
It said it would not tender its Schering shares under the initial offer period set out by Bayer. Bayer filed a lawsuit in a US court on Tuesday to stop Merck from voting its acquired stake in Schering, saying Merck violated US securities law by not properly disclosing the purchase.
Bayer asked the court to order Merck to divest the Schering shares and award punitive damages, according to the lawsuit filed in the US District Court in Manhattan.