BERLIN — Bayer's offer for drug maker Schering was embraced by its target Friday as German rival Merck abandoned its own takeover offer.
Bayer's 16.3-billion-euro ($19.6-billion) bid late Thursday trumped Merck's hostile 14.9-billion-euro ($17.9-billion) offer for Schering made March 13.
Bayer CEO Werner Wenning said 6,000 jobs probably would be eliminated after the acquisition, and the company did not plan to divest any Schering units.
Schering Chief Executive Hubertus Erlen said becoming part of Bayer made strategic sense.
"Both businesses are complementary and follow the same strategy," he said. "Together they will be even more competitive internationally."
The deal sends a strong signal that Bayer is putting new emphasis on its pharmaceuticals unit. Since it recalled its anti-cholesterol treatment Baycol in 2001 because of safety issues, Bayer has tried to find a partner for the unit.
By buying Schering, Bayer would have access to its popular oral contraceptive, Yasmin, which posted sales of 586 million euros in 2005.
Wenning said the new company probably would see as much as 9 billion euros in sales annually from pharmaceuticals and overall healthcare-related sales of 15 billion euros.
Merck said Friday that it had abandoned its offer because its executive board had "reached the conclusion that a higher price per Schering share is not justified."
Schering had rebuffed Merck's March 12 offer as too low. Analysts had contended that Schering probably would hold out for a higher bid -- but speculation centered on Switzerland's Novartis, not Bayer.
Bayer agreed to pay 86 euros a share, or 12% more than Merck's offer of 77 euros.
In a conference call, Erlen said talks with Bayer began March 13 and he realized that Schering could no longer remain independent.
"Schering's executive board unanimously supports the Bayer offer," he said.
Schering shares fell $3.69, or 3%, to $103.51, while shares of Bayer rose $1.05, or 3%, to $42.74.
Pending regulatory approval in Europe and the United States, the combined pharmaceuticals unit would be named Bayer-Schering Pharmaceuticals and remain headquartered in Berlin.
Schering is the only company on Germany's DAX index of blue-chip stocks to be headquartered in Berlin and is a major employer in the capital, where unemployment is nearly 19%.
Bayer was founded in 1863 and invented aspirin in 1897. The company employs about 93,700 workers.
Schering, founded in 1851 as a pharmacy, has since grown to a corporation that employs 24,500 people worldwide.