Swiss pharmaceuticals group Roche has denied reports that it intended to buy German group Bayer or its drugs business.
Roche had reportedly made an offer to Roche last year, but was turned down, sources had told Reuters news agency. In the latest approach, Roche is offering a mixture of stock and cash in exchange for the business.
The sources said Bayer, which recently suffered a severe setback when it had to withdraw its anti-cholesterol drug, Baycol, has not yet responded to Roche's plans and is expected to discuss the proposal at a meeting with its supervisory board on September 13.
A Roche spokeswoman in Basel said the company did not comment on speculation. However, earlier this month Bayer chief executive Manfred Schneider said the company had received overtures from two companies to buy its drug business. He did not name the interested parties at that time.
Zurich Kantonalbank's pharmaceutical analyst, Patrick Burgermeister told swissinfo that a clearer idea of what might be happening should emerge after the September board meeting at Bayer.
"There might be other parties interested in buying Bayer, but nothing will be decided before the 13th of September as it's still possible Bayer might not want to sell the pharmaceutical division," explained Burgermeister.
Bayer reviews strategy
Bayer, the inventor of aspirin a century ago, is evaluating its pharmaceuticals business strategy after withdrawing Baycol on August 8 because of potentially fatal side effects.
Burgermeister believes that the problems with Baycol are just one of three reasons why Roche would be sensible not to look at linking with Bayer.
"From the drugs point of view we don't think Bayer is the optimial fit for Roche because Bayer's biggest selling drug is an antibiotic and the same is true for Roche - so they would compete against each other," said Burgermeister. "The second biggest drug from Bayer has already lost its patent potential and its number three drug (Baycol) has been removed from the market."
However, industry sources said Bayer's management was reluctant to sell the business outright, but may not be averse to portioning it off to Roche in return for a strategic stake in the Swiss company.
Roche on the other hand, would find a good opportunity to dilute the 20 per stake that bigger Swiss rival Novartis picked up in the company earlier in the year.
Roche losing business
Roche has been under pressure to revitalize its drug business following serious product setbacks in recent years and a slowdown in sales growth - which was five per cent in the first half of 2001, below the industry average of 10 per cent.
Meanwhile, the United States-based investment firm, Tweedy Brown, known for crusading on behalf of shareholders in undervalued companies, and owner of 4.5 million Bayer shares, or 0.7 per cent, wrote to the company on Friday asking it to sell off its drug business.
"Given that Bayer's share price has, over the long term, underperformed the market and competitors such as Akzo, BASF and Aventis, it is our duty as shareholders' representatives to make sure that the board of management will implement a strategy that is consistent with a maximization of shareholder value in the long term," Tom Shrager, a partner at Tweedy wrote Bayer board member Hermann Strenger.
Shrager said he was in touch with several other shareholders and would press for the company to sell the pharmaceuticals business.
swissinfo with agencies