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* Adjusted EBITDA 2.74 bln euros vs Rtrs poll 2.59 bln
* Sales 10.56 bln euros vs poll 10.67 bln
* Shares up 4.2 pct
By Marilyn Gerlach
FRANKFURT, April 28 (Reuters) - Shares in Germany's Bayer rose by 4 percent on Monday, lifted by a wave of pharmaceuticals sector merger speculation and rising sales of new drugs that helped it to better than expected first-quarter profit.
While Bayer's bulging drugs pipeline has been largely responsible for the stock's 23 percent gain over the past year, outperforming a 17 percent rise for the European drug sector, , U.S. group Pfizer's confirmation of its interest in AstraZeneca on Monday also rubbed off on rivals.
Sources told Reuters last week that Bayer and Reckitt Benckiser are in the running to buy Merck & Co's consumer healthcare unit, and Bayer CEO Marijn Dekkers told German television on Monday that his company would look closely at any opportunities.
"The Pfizer offer for AstraZeneca has generated acquisition fantasies in the whole sector," said one trader who asked to remain anonymous.
Dekkers later told analysts that Bayer, though under no pressure to make acquisitions in pharmaceuticals, wants to be global No.1 in over-the-counter medicines and aims to achieve that through organic growth and bolt-on acquisitions.
Peel Hunt equity strategist Ian Williams acknowledged the importance of the M&A speculation for sector sentiment but said that much of it has already been priced in by the market.
However, Bayer was also buoyed by its first-quarter results, with Commerzbank's Daniel Wendorff citing its underlying pharmaceuticals earnings.
"Sales of new drugs were very good too," he said.
The company's top five new medicines - anti-clotting drug Xarelto, eye treatment Eylea, lung drug Adempas and cancer treatemnts Stivarga and Xofigo - achieved combined sales of 598 million euros ($827.49 million), against 244 million euros in the first three months of last year.
Drug sales and better than expected performances from the company's CropScience and MaterialScience divisions lifted group earnings before interest, tax, depreciation and amortisation (EBITDA), exluding special items, by 11.6 percent year on year to 2.74 billion euros.
That beat the consensus estimate of 2.59 billion euros in a Reuters poll of analysts in spite of negative currency effects of 200 million euros.
Core earnings per share, up nearly 15 percent to 1.95 euros, compared favourably with last week's results from Swiss rival Novartis, which posted a 1 percent rise to $1.31 and a worse than expected 1 percent drop in pharmaceuticals sales.
Bayer's CropScience division, which makes insecticides, fungicides and seeds, benefited from a weather-related early crop planting in Europe and strong sales in Latin America to post a 1.6 percent rise in underlying core profit at 1.1 billion euros, beating estimates for a slight decline.
Adjusted core earnings at the MaterialScience division, which makes polycarbonate plastics for panoramic roofs in luxury cars and for Blu-ray discs, jumped 79 percent to 366 million euros. That was well above a consensus forecast for 258 million euros thanks to higher North American and Asia-Pacific sales.
Bayer confirmed its full-year outlook for currency-adjusted sales of about 41-42 billion euros, compared with 40.16 billion last year. It said it continued to expect a low to medium single-digit percentage increase in adjusted EBITDA for the year.
Shares in the company were up 4 percent at 99.63 euros by 1328 GMT, against a 0.4 percent gain for the Frankfurt blue-chip index. ($1 = 0.7227 Euros) (Additional reporting by Daniela Pegna; Editing by David Goodman)