(Updates with spokesman comment, background, report of raising bid price further)
LEVERKUSEN, Germany (AFX) - Bayer AG said it is preparing a mandatory offer for Schering AG after securing around 35 pct of the shares in the market at up to 88 eur per share.
'We hold around 35 pct,' a spokesman said, referring to shares bought in the market.
As of yesterday, Bayer held 55.53 pct of shares, of which 29.77 pct was from the tender offer and 25.76 pct were from buying shares directly in the market. Shares which have been tendered are not considered to fully belong to Bayer, unless the conditions of the takeover are met. Bayer needs a commitment of 75 pct of Schering shares by midnight today in order for the current offer to be valid.
'Bayer still aims to wholly acquire Schering and is preparing to launch a mandatory offer if the current takeover offer proves unsuccessful,' the company said in a statement.
Having paid up to 88 eur per share -- including for the 11 pct stake held by Allianz AG -- means Bayer will have to pay the same to shareholders who have already tendered their shares in to the current offer.
The number of shares tendered yesterday had declined from Monday's 39.21 pct.
The Bayer spokesman explained that the decline relates in part to Allianz AG withdrawing its previously tendered shares, in order to sell them directly to Bayer in the market.
The price paid in the market is 2 eur above the original 86 eur per share offer, and comes as a response to Merck KGaA aggressively buying of shares in the market over the last week.
Bayer said it has filed a suit for damages against Merck in New York, saying that the Darmstadt-based company has failed to disclose its strategic intentions behind its acquisition of Schering shares, and that this is in violation of US law.
'We are ready for a second round' in the takeover battle for Schering, chief executive Werner Wenning said.
'We will continue to put up a good, fair fight for Schering because we are convinced that together we can create value from which everyone benefits: Schering, Bayer and our stockholders, and also Germany as a location for the pharmaceutical industry,' he added.
Meanwhile, according to a filing to the US Securities and Exchange Commission, Merck said it has raised its stake in Schering to almost 22 pct at an average price of 86.88 eur per share.
Merck is seeking a blocking minority share of over 25 pct, which would effectively derail Bayer's current offer, according to industry sources.
The sources also said that Merck is not attempting to reach 30 pct, which would trigger a mandatory offer from the company.
Meanwhile, a report in Die Welt, citing sources, said that Bayer is in talks with Merck over raising the takeover offer even further to between 89-92 eur per share. This would mean that Bayer would pay 1.1 bln eur over the original 86 eur per share bid that valued Schering at 16.5 bln eur. ragnhild.kjetland@afxnews.com rkj/jsa/rkj/jfr COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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