Bloomberg - German Drug Shares Rise Amid New Merger Speculation (Update1)
Bloomberg News
June 5, 1998, 8:41 a.m. PT
German Drug Shares Rise Amid New Merger Speculation (Update1)
(Updates with closing share prices.)
Frankfurt, June 5 (Bloomberg) - Shares in German drug and
chemical makers such as Bayer AG, Altana AG and Degussa AG rose
as Sweden's Astra AB's plans to buy a 50-percent stake in a U.S.
joint venture sparked expectations of further mergers.
''I can imagine that interest in Astra will grow because
Astra is strengthening its position in the U.S. market, which
will be the world's fastest-growing drug market in the next few
years,'' said Christa Baehr, an analyst at Bankgesellschaft
Berlin AG. ''European companies will have to be in the U.S. to be
well-positioned.''
Altana rose 5.0 percent, Degussa gained 2.4 percent and
Bayer rose 1.9 percent, as talks between Sweden's Astra and U.S.-
based Merck and Co. revived expectations of further drug industry
mergers. Astra said in March it's seeking a merger partner such
as Bayer's drug arm, Zeneca Group Plc or Schering-Plough Corp.
Drug makers worldwide have been seeking mergers or
acquisitions to increase research and development spending as
governments and health insurers demand lower drug prices.
Astra, a drugmaker controlled by Sweden's Wallenberg family,
is close to buying Merck & Co.'s 50 percent stake in their U.S.
licensing joint venture, according to people familiar with the
talks. Astra confirmed the talks are taking place without
providing further details.
Increased Leverage
Shares in Bayer, Germany's second-largest drug and chemicals
maker, rose 1.55 marks to 85.5 deutsche marks ($48.20) after
rising as high as 85.60 marks.
Once Astra buys out the venture, it could have more leverage
to seek a merger partner, analysts said. And Bayer, which has
repeatedly said it's open to mergers and acquisitions, is seen as
a likely candidate. Bayer's chief executive said in March the
company is open to mergers and acquisitions to boost market share
though he said the company isn't in negotiations.
A merger between Bayer and Astra ''would make sense,'' said
Christian Faitz, an analyst at HSBC Trinkaus in Dusseldorf.
''There would be both marketing and product synergies.''
Bayer spokesman Guenter Forneck declined to comment on
whether the company is interested in a merger with Astra.
Altana shares closed up 7.1 marks to 148, while Degussa
gained 2.75 marks to 117. Bucking the trend, Hoechst shares fell
25 pfennig to 86.5 marks.
--Renee S. Cordes in the Frankfurt newsroom (49 69) 92041 200/pgc |
