* Bayer raises offer to 362 crowns per share vs 336 crowns
* Algeta's board unanimously backs sweetened bid
* Bayer shares up 1 pct, Algeta up 1.5 pct
(Adds analyst comment, further details of deal, shares)
FRANKFURT/OSLO, Dec 19 Bayer has won
backing from the board of Algeta, its partner for a
new prostate cancer treatment, for an increased $2.9 billion
offer to buy the Norwegian company.
The cash deal would boost Bayer's drugs division by giving
it outright control over Xofigo, a drug the two have developed
jointly since 2009 and started selling in the United States this
The German drugs and chemicals group regards Xofigo as one
of its five most important new drugs, a group that together has
joint annual sales potential of 5.5 billion euros ($7.6
Bayer's sweetened bid at 362 Norwegian crowns per share
represents a 37 percent premium to Algeta's closing price on
Nov. 25, the day before its initial offer became public.
Last year, healthcare deals carried an average 36 percent
premium to the target's recent share price, according to Thomson
Bayer's increased bid is at a 48 percent premium to Algeta's
three-month volume weighted average stock price on Nov. 25.
Bayer initially offered $2.4 billion, or 336 crowns per
Algeta said on Thursday that its board unanimously
recommended shareholders accept Bayer's sweetened offer.
A fund that is the company's largest shareholder and senior
Algeta managers, together representing 14 percent of Algeta's
share capital, planned to accept, Algeta said.
Bayer's shares were up 1 percent, while Algeta's rose 1.5
percent by 1021 GMT in line with the Stoxx Europe 600 health
For Bayer, Algeta fits with Chief Executive Marijn Dekkers'
strategy of driving growth by building up the pharmaceuticals
division, which now overshadows chemicals in importance.
Bayer sees high market potential for Xofigo, a radioactive
agent that migrates to parts of the body of prostate cancer
patients with abnormal bone growth, thereby minimising damage to
Although Xofigo sales were only $17 million in the third
quarter, they are expected to rise to $1 billion or more by
But some analysts, who though Bayer's initial offer might be
too high, repeated those concerns on Thursday.
"The takeover price ... appears to be a bit stiff," DZ Bank
analyst Peter Spengler said in a note to clients.
However, Spengler also estimated that the takeover will
allow Bayer to save milestone payments and royalties of over 500
"It strengthens Bayer's oncology business," said Helvea
analyst Odile Rundquist. "We expect a positive impact on Bayer's
The offer, which is expected to go to Algeta shareholders in
January once it has been cleared by the Oslo stock exchange, is
subject to a mininum acceptance of 90 percent of Algeta's share
capital, as well as approval by antitrust authorities.
The transaction is expected to close during the first
($1 = 0.7266 euros)
(Reporting by Jonathan Gould, Christoph Steitz and Gwladys
Fouche; Editing by Erica Billingham)