Seven private equity companies are preparing for a takeover battle over a €4bn ($5.2bn) generic drugs business, put up for sale by Germany pharmaceutical group Merck earlier this month.

Cinven, Carlyle, Blackstone Group, Novartis, Kohlberg Kravis Roberts, Texas Pacific Group, and Permira are all considering a bid for the world's fourth largest generic drugs maker, according to sources close to the transaction.