Bayer rises on talk of Pfizer interest

Shares in German drugs and chemicals group Bayer rose on market talk of takeover interest from US rival Pfizer, traders said yesterday.

Bayer shares were 3.3 per cent higher at €54.44 by 0905 GMT, compared with a 0.9 per cent rise on the German benchmark DAX index.

Bayer, which has a market capitalisation of around €40 billion, declined to comment. Pfizer was not immediately available for comment.

Bayer, which boasts a healthy pipeline of new drugs and an attractive over-the-counter medicines business, has been a rumoured takeover target in the past.

Any acquisition by a pure pharmaceutical company, however, would be complicated, since it would require the break-up of the chemical-drugs hybrid. Bayer is also a top global player in plastics and in agrochemicals.

For Pfizer, buying Bayer would also bring an added complication in that the US group only recently sold off its non-prescription drug business to Johnson & Johnson. Pfizer has a history of doing mega-deals but investors have been disappointed by past acquisitions that have failed to curtail its reliance on aging blockbusters, including cholesterol fighter Lipitor which goes off patent in 2011.

The company rakes in €9.2 a year for Lipitor and needs new products to offset sales declines of this and other products.

Pfizer became the global industry leader by buying Pharmacia and Warner-Lambert during the past decade, but its stock is trading at 11-year lows because its laboratories have failed to deliver enough new drugs.