MERCK, the German drug and chemical maker, is set to make a €15 billion (£10.3 billion) hostile bid for Schering, a domestic rival that has rebuffed its friendly overtures.

Merck informed Schering of its intention to bid for the company over the weekend and was told that its proposed offer “significantly undervalued” the business, which makes contraceptive pills and cancer treatments.

A merger of the two companies, which are roughly the same size, would create Germany’s first global pharmaceuticals group with combined annual sales of €11 billion.

Merck is controlled by about 120 members of the Merck family with a combined 73 per cent stake. The family would contribute €1 billion towards the planned acquisition, which would be highly leveraged.

However, Schering made clear yesterday that it did not want to do a deal and analysts said that the takeover battle could last for months.

A spokesman for Schering said: “The offer is not in the interest of our shareholders and does not reflect the true value of Schering.

“We also confirm that the approach is unsolicited and that no negotiations are ongoing with Merck.”

Schering is being defended against Merck by Morgan Stanley, the American investment bank. Goldman Sachs and Deutsche Bank are working with Merck on its approach to Schering.

Merck’s main business is its chemicals unit, which supplies liquid crystals used in flat television and computer screens and mobile phone displays. It is keen to boost its pharamaceuticals business, which has a strong generic drugs division, by acquiring Schering.

Schering’s drugs include Betaseron, a treatment for multiple sclerosis.

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