Bayer has bid approximately $20 billion to acquire Schering AG. Schering, based in Berlin, is recommending the offer to its shareholders, according to a company statement. Schering also recently received an offer of $17.9 billion by Merck KGaA, which that company does not plan to increase.

Currently, Bayer’s largest business is producing polyurethane, polycarbonates and other manufacturing materials, which accounted for about $13 billion in sales last year. Schering is a leader in oral contraceptives and also specializes in cancer drugs, while Bayer has recently focused its research on cancer and cardiovascular drugs.

“We have for some time believed that Schering was the ideal partner for moving into specialty pharmaceuticals,” Arthur Higgins, the chief executive of Bayer’s health care division. “We have two excellent German companies coming together.”

The chairman of Schering, Hubertus Erlen, said, “Both business are complementary and follow the same strategy. Together they will be even more competitive.”

According to a Bayer company statement, the merger could result in about 6,000 jobs being eliminated, or 10% of the combined work force. The company, based in the Rhine River town of Leverkusen, estimates it will save $837 million annually from the merger by 2009. Among the areas in which a Bayer-Schering combination would be valuable, according to Mr. Higgins, was in the marketing of cancer drugs. Bayer recently introduced a kidney cancer drug in Britain, and expects to receive approval to sell it in the U.S. later this year. Schering has an established sales force for its portfolio of cancer drugs, which Bayer could utilize.