The news that Merck KGaA has quietly built a near-21% stake in Schering AG has sparked widespread speculation that it may still be seeking a merger with the drugmaker, and is trying to ride out Schering’s preferred partner Bayer. The latter said it may raise its offer to make sure the deal goes ahead.

Despite ostensibly standing aside from a planned takeover of Schering when Bayer emerged with its 86 euro-per-share bid, Merck has been steadily increasing its stake, and thereby making it hard for Bayer to meet its deadline of securing 75% of Schering’s voting capital by midnight tomorrow.

Bayer currently owns around 23% of Schering, with a further 37% pledged by shareholders willing to accept its bid, giving it a stake of 60%. But if Merck can bring its holding to above 25% in the next day and half, it could block the deal.

Bayer said it would consider buying shares above 86 euros over the coming hours, and if this occurs will pay the highest price to all Schering shareholders if that will bring it across the minimum threshold.

Under German law, Bayer cannot make any further changes to the takeover offer, which includes changing the minimum acceptance threshold, the offer price or the acceptance period. And while Schering’s management may be open to its offer, the risk for Bayer is that other shareholders may see Merck’s position as a trigger to seek a higher price for their shares.

But forcing Schering back to the altar may not be its intention, according to reports in the German press this morning. Merck may be trying to maintain a stake in what would be the top German pharmaceuticals company, or it could sense an opportunity to make a quick profit on the shares by selling them to Bayer ahead of the deadline at a premium.

In a statement issued last Friday, Bayer said that Merck’s actions were ‘incomprehensible’, as it is paying a price for the shares well above its 77-euro offer, which it declined to raise a few weeks ago saying this would over-value Schering. It also said the tactics seemed to be designed to block the merger, but Merck’s silence on the issue was ‘leaving investors and the parties involved uncertain as to its strategy’.

Neither Merck nor Bayer was prepared to comment on the new developments ahead of the deadline tomorrow.

In mid-morning trading, Bayer’s shares had fallen 3.3% to 31.12 euros, while Merck was down 3.6% to 69.40 euros.