Updated from 5:08 p.m. ESTGerman pharmaceuticals concern Schering AG ( SHR), after rejecting a takeover proposal from Merck KgaA, has accepted a higher bid from drug and chemicals maker Bayer ( BAY). Bayer said Thursday the transaction will have a total value of 16.3 billion euros, or 86 euros a share. Using current exchange rates, the deal would be worth about $19.5 billion, or $103 a share. Merck KgaA recently said it wanted to acquire Schering for roughly $18 billion. The offer was rejected. Bayer said in a statement on its Web site that the acquisition "is in line with our strategic objective to further grow our health-care business, especially in the area of pharmaceutical specialty products, thus substantially strengthening our Bayer HealthCare subgroup in its role as a primary growth engine for the Bayer Group." Schering's executive board plans to recommend that shareholders support the Bayer offer. "Joining forces of Schering and Bayer will form a leading specialized pharmaceutical company," says Hubertus Erlen, the chairman of Schering's executive board. "Both businesses are complementary and follow the same strategy. Together they will be even more competitive internationally." Bayer says the merger will save the combined company around 700 million euros a year, but that it will require restructuring costs of roughly 1 billion euros. The merged company will be called Bayer-Schering Pharmaceuticals and will be based in Berlin. Investors, sensing the bidding for Schering might not be over, sent its stock up $6.90, or 6.9%, to $107.20. Bayer added 58 cents, or 1.4%, to $41.69. Schering's former U.S. assets were the basis for what is now Schering-Plough ( SGP). Similarly, Merck & Co. ( MRK) of Whitehouse Station, N.J., was once part of Merck KgaA, but the two have been independent for nearly 90 years.