Germany's biggest drug company, Bayer AG, is poised to buy its rival Schering AG with an offer of 16.3 billion euros (about 19.7 billion U.S. dollars).

Bayer's bid drove up shares of both the companies on the Frankfurt Stock Market on Friday after Schering said it backs the offer.

Schering said on Friday that it would recommend to its shareholders that it accept Bayer's bid one day after Bayer announced the bid.

Schering chief Hurbert Erlen said that the Bayer offer was " extremely attractive."

The merger would result in job cuts of 6,000, one tenth of the future Bayer-Schering workforce, Bayer chief Werner Wenning said.

The proposed new company, Bayer-Schering Pharmaceuticals, will be based in Berlin.

The shares of both Bayer and Schering jumped on Friday morning on the Frankfurt Stock Market. Bayer shares rose 43 cents, or 1.2 percent, to 35.18 euros while Schering gained 1.12 euros to 86.09.

Bayer's bid came against a hostile bid from another German drug company Merck KGaA.

Merck launched a 14.6 billion offer for Schering on March 14, but was rejected by the Berlin-based company, which hired Morgan Stanley and Dresdner Kleinwort Wasserstein to advise it on other alternatives.

Bayer's offer values Schering share at 86 euros, much higher than Merck's offer of 77 euros per share.

Schering is the world's largest maker of birth-control pills.

"Both businesses are complementary and follow the same strategy, " Erlan said. Wenning said Schering was "an excellent fit" in his company's strategy.

Source: Xinhua