Munich - Merck agreed to sell its Schering stake to German rival Bayer, clearing the way for Bayer to buy the world's largest maker of birth-control pills for €17.1 billion (R147 billion).
Merck will divest its 21.8 percent Schering holding for €89 a share, which is €3 more than Bayer's original offer. All investors who had tendered their shares or committed to doing so yesterday would get that price, Bayer said.
Bayer shares had their biggest gain in three years. Merck's holding, built up since Bayer's March offer, threatened to derail Bayer's plan to become Germany's largest drug maker.
Bayer wants to add Berlin-based Schering's best-selling multiple sclerosis treatment and Yasmin birth control pills to help its lagging health unit. Merck and Bayer may co-operate on other projects.
"This is very good news," said Boris Schakowski, a fund manager with Union Investment in Frankfurt.
"This is value enhancing for Bayer and this is the best fit in our eyes for Schering. It's a financial gain for Merck and since they have shown themselves to be co-operative, they have laid a foundation for further co-operation."
Bayer shares rose as much as 9.8 percent in Frankfurt, the most since March 2003. Shares of Merck climbed 6.3 percent.
Shares of Bayer had declined 12 percent between June 8 - when Merck said it had a 6 percent stake in Schering - and yesterday.
Bayer's bid of e86 a share was accepted by Schering's board during March, beating a €77 a share offer from Merck. Yesterday's offer was 3.5 percent more than Bayer's first bid. Merck will have a one-time gain of €400 million in the second quarter.
"We're very pleased about Merck's decision because a lengthy competitive bidding process would have greatly affected Schering's future," said Bayer chief executive Werner Wenning.
Merck bought 2.1 million Schering shares on Tuesday, the company said in a regulatory filing.
Bayer yesterday withdrew a lawsuit it had filed in New York the previous day alleging that Merck violated US legislation by failing to publicly disclose that it was acquiring shares of Schering.
Deutsche Bank advised Merck, while Morgan Stanley and Dresdner Kleinwort Wasserstein advised Schering. Bayer was advised by Credit Suisse and Greenhill. - Bloomberg