German drug-maker Schering said it stands behind a friendly takeover by pharmaceutical giant Bayer. But 6,000 jobs are likely to be lost as a result of the deal.
Bayer Schering headquarters will remain in Berlin
Berlin-based Schering said it supports Bayer's cash offer of 86 euros ($102) per share to acquire the company, in a deal valued at 16.3 billion euros based on 190 million outstanding Schering shares.
Schering Chairman of the Board Hubertus Erlen called it an "extremely attractive" offer, and said the company will recommend the deal to its shareholders.
Headquarters i n Berli n
Bayer's white-knight offer came in some 12 percent above an unsolicited takeover bid last week from Darmstadt-based Merck.
If the deal goes through, the new company, Bayer Schering Pharma, will be led by executives from both Schering and Bayer, but will be based in Berlin. Bayer headquarters are in Leverkusen, near Düsseldorf. The capital city will prove an important base for research and development, Erlen said.
Job cuts expected
Meanwhile, participants in the deal said the merger will mean cutting some 6,000 jobs.
Bayer CEO Werner Wenning expects job losses
"We see a synergy potential of 6,000 people," Bayer CEO Werner Wenning told analysts in an internet conference on Friday.
Bayer's motivation appears to be gaining access to Schering's drug pipeline, as well as its relatively large presence in the US market. The merged company hopes to be better positioned to compete with giants like Pfizer, GlaxoSmithKline, and SanofiAventis.
Aims for US growth
Currently Schering and Bayer are minor players in the $250-billion US drugs market. In the US, Schering operates under the name Berlex Laboratories. It has a foothold in birth control pills, a multiple-sclerosis treatment, and is developing some promising cancer drugs.
Bayer has had a string of bad luck recently, and the past year was marked by controversy, lawsuits and flops. Aspirin, which it patented in 1899, still generates more than $1 billion per year.