German chemicals and pharmaceuticals producer Merck KGaA has extended the takeover offer for AZ Electronics after acceptance of its £1.6 billion (about €200 million) cash bid fell short of the target by the first closing date.

Merck said on Jan. 22 that its offer had been accepted by only 39.8% of the Luxembourg-based electronics firm's existing share capital. It subsequently extended the deadline until February 5. The German company had initially said the offer would close in mid-February.

Under British law, Merck could lower the acceptance level, the news agency Reuters pointed out. However, the bid already represents a 40% premium over the average share price over the past three months.

When announcing the takeover plans in December, Merck CEO Karl-Ludwig Kley said the deal would allow the Darmstadt company to lift its profile in the high-margin electronics space beyond the display industry, where it already is a leading supplier of liquid crystals for displays.

AZ Electronics, of once part of defunct chemical conglomerate Hoechst, manufactures materials used in integrated circuits, flat panel displays and light-emitting diodes.