An investigation into Bayer’s recent takeover of Schering AG by Germany’s financial watchdog is looking at possible insider trading before the deal was announced, reports the Financial Times.

The Bundesbank and German Financial Supervisory Authority (BaFin) is looking at sharetrading prior to the initial offer for Schering by Merck KGaA, a move that pushed Bayer into making a counter-bid.

The FT states that in the three working days prior to Merck's intentions becoming public on Sunday March 12, the volume of Schering shares traded was three to five times higher than on previous days and the stock climbed 9% to 65.80 euros. On that Sunday, Schering rejected Merck’s offer of 77 euros per share, stating it would propose alternatives. Based on this, and the likelihood of another bidder, Monday saw the climb 25% above Friday’s closing price to 82.40 euros per share.

Bayer then came in with an 86 euro per share bid and Merck attempted to buy shares to block deal, thus forcing the Leverkusen-based group to up its bid to 90 euros.

BaFin intends to interview executives, bankers and public relations experts involved with both bidders, according to the newspaper, in order to establish whether information seeped into the market prematurely although preliminary checks had given the agency grounds to intensity its inquiry. BaFin said that such a move was not uncommon and that it was far too early to say whether any charges will be filed.