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By Michael Erman and Soyoung Kim
Nov 15 (Reuters) - UK consumer and healthcare company Reckitt Benckiser Group Plc made a rival $1.4 billion offer for Schiff Nutrition International Inc on Thursday, topping Bayer AG's agreed $1.2 billion deal to acquire the U.S. vitamin maker.
Reckitt proposed to pay $42 for each Schiff share, a 23.5 percent premium over the $34 per share that Bayer, Germany's biggest drugmaker, agreed to pay in late October.
Shares of Schiff Nutrition surged nearly 30 percent to $44 in after-hours trading on the New York Stock Exchange, higher than Reckitt's rival offer and indicating investors expect the bidding to go higher.
Reckitt, which sells consumer health, hygiene and home products, said it will commence a tender offer on Friday to buy the vitamin maker, in an effort to enter the $30 billion global market for vitamins, minerals and supplements.
"When this offer was made by Bayer -- which was a bilateral agreement and not a public auction process -- we knew that this was an area we would be very interested in," Reckitt's Chief Executive Officer Rakesh Kapoor told Reuters on Thursday.
"That's why we started to work and look at it once again to see whether this would be attractive to our shareholders. Based on our due diligence, we believe it is and that's why we've come up with a strong offer."
Representatives for Bayer and Schiff could not be immediately reached for comment. Schiff Chairman Eric Weider and private equity firm TPG Capital controlled 85 percent of the company's voting power, as of end-October.
Reckitt's offer of $42 per share also represents a premium of nearly 24 percent to Schiff's shares close on Thursday. The company said it is confident the deal will close by the year-end.
On Oct. 30, Bayer announced a $1.2 billion agreement to buy Schiff, seeking stable sources of growth to complement its more volatile prescription drugs business.
Under the terms of its deal with Bayer, Schiff is allowed to entertain superior offers made in writing before Nov. 28. If it decides to go with another offer, it would have to pay a $22 million breakup fee to Bayer.
Many pharmaceutical companies are keen to expand in non-prescription drugs as a steadier, albeit less profitable, counterweight to prescription medicines, where there are risks of, for example, clinical trial failures and patent expiries.
Reckitt sells a range of household and personal care products, with everything from dishwashers and detergents to anti-acne creams and condoms in its portfolio.
Reckitt, which would fund the deal with existing facilities, expects it to immediately add to its earnings on an adjusted basis.
Morgan Stanley & Co is acting as financial adviser to Reckitt, with Paul, Weiss, Rifkind, Wharton & Garrison LLP serving as legal adviser.