A bidding war could break out between two of Europe's biggest drugs companies to snap up vitamin and nutritional supplement maker Schiff Nutrition.
On Thursday night Reckitt Benckiser made a $1.4bn (£880m) offer for the American company, eclipsing German rival Bayer's $1.2bn bid – which had been agreed by both sides.
The $42-a-share offer is a 23.5% premium on the $34 a share Bayer has offered, as both sides aim to move into the lucrative vitamin supplements market to offset declines in the prescription drug market.
Investors expect a counter-bid by Bayer, as shares soared to $44 in after-hours trading on the New York Stock Exchange. Schiff and Bayer agreed the initial deal on 30 October.
Rakesh Kapoor, chief executive of Reckitt Benckiser, told Reuters: "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.
"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."
If successful, it would bring Reckitt into the $30bn vitamins and supplements market for the first time. It currently makes a range of painkillers and creams, and owns brands including Durex and Cillit Bang.
The company said the acquisition would boost earnings immediately, by up to 2%, according to analysts.
Peter Spengler, an analyst at DZ Bank, wrote: "A bidding war cannot be ruled out. Bayer probably has to match the Reckitt offer. This would result in an acquisition price which might get unattractive for Bayer."
There are also suggestions that other parties could line up a bid, with Johnson & Johnson the most likely candidate, since it currently has little presence in the vitamins and supplements market.
