Merrill Lynch and JP Morgan are funding a $1.2bn (€965m) share repurchase by Engelhard, the US chemical company, to help fend off a hostile bid from BASF in what would be the largest cross-border mergers and acquisitions deal by a German company this year.

Engelhard said it was planning to repurchase a fifth of its shares for $45 each, 17% above the stock's closing price of $38.50 yesterday.