Bayer is making progress toward integrating Schering AG into its pharmaceuticals business, CEO Werner Wenning reported during an Aug. 29 second quarter earnings call.

The German company's joint integration team, which began functioning in June, "has established a global project management organization to steer the integration," Wenning noted.

"We are making good progress, and you will have seen that the board of management and the majority of senior executives of Bayer/Schering have already been nominated, and that the business model for the combined company has been developed."

Bayer announced its offer to acquire Schering for €86 ($110) per share in a transaction valued at €16.3 bil. ($20.9 bil.) in March. The firm later agreed to also pay €89 ($114.17) per share to rival suitor Merck KgaA after Merck bought more than 20% of Schering's stock (¹ Also see "Merck KgaA Steps Aside For Bayer/Schering Merger To Move Forward" - Pink Sheet, 14 June, 2006.).

In June, the firm reported it had reached the percentage of Schering shares required under German law for the deal to move forward (² Also see "Bayer Has Schering AG Green Light" - Pink Sheet, 20 June, 2006.).

Schering stockholders are scheduled to vote on a domination and profit and loss transfer agreement with Bayer subsidiary Dritte BV GmbH during a Sept. 13 extraordinary meeting. Stockholders also will elect new members to the Schering supervisory board.

Bayer has said it expects to realize €700 mil. ($898 mil.) in synergies, and Wenner stated the firm still believes that target is "realistic."

"We are now in the process of validating our synergy target by means of a thorough [analysis]," he said.

According to Bayer, the Schering acquisition will contribute €2.9 bil. ($3.7 bil.) in sales in 2006, with an underlying EBITDA contribution of €600 mil. ($769.5 mil.) in the second half. The firm will incur charges of €100 mil. ($128.26 mil.) related to the integration this year.

Bayer reported second quarter revenues for its pharmaceuticals division of €1.1 bil. ($1.4 bil.), up 20.4%, including a contribution of €144 mil. ($184.7 mil.) in Schering sales recorded June 23-30, the firm said.

-Brooke McManus (b.mcmanus@elsevier.com)

Schering Integration On Track, Bayer CEO Says

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