* Bayer offers $34 per share vs $23.19 Friday closing price
* Part of drive to boost non-prescription drugs business
* Bayer's Q3 adj EBITDA up 2 pct, broadly in line with poll
* Shares up 0.3 pct, in line with sector
FRANKFURT, Oct 30 (Reuters) - Germany's Bayer is to buy U.S. vitamins maker Schiff Nutrition International for an agreed $1.2 billion as it seeks stable sources of growth to complement its more volatile prescription drugs business.
Many pharmaceutical companies are keen to expand in non-prescription drugs as a steadier, albeit less profitable, counterweight to prescription medicines, where there are risks of, for example, clinical trial failures and patent expiries.
Bayer, Germany's biggest drugmaker, said on Tuesday it was offering $34 per share in cash to Schiff shareholders, a 47 percent premium over Friday's closing price of $23.19.
The deal values Schiff at about 3.1 times its forecast annual sales, around the upper end of typical deal multiples of 2-3 in the non-prescription drugs industry.
``The deal appears consistent with Bayer's strategy, and although the premium paid appears rich at first, our reaction is it isn't outlandish,'' Bernstein Research analyst Jeremy Redenius said.
In August, Aspen Pharmacare bought some GlaxoSmithKline non-prescription drugs for about two times annual sales.
At 0830 GMT shares in Bayer, which invented Aspirin and synthetic rubber, were up 0.3 percent at 66.73 euros, broadly in line with the STOXX Europe 600 healthcare index.
While Bayer expects to benefit from new prescription drugs like Xarelto for stroke prevention, it has struck a series of a small and medium-sized deals to tap growth in markets like animal health, crop protection and over-the-counter drugs.
The strategy shows signs of bearing fruit as the group raised its full-year earnings forecast in July, in part because of strong demand at its farming pesticides business.
On Tuesday, the group posted third-quarter underlying earnings in line with expectations, as more prescriptions of its drugs offset a weaker plastics business, and reiterated its outlook for the full year.
STRING OF DEALS
Bayer said it would benefit from Schiff's strength in product development and brand recognition, and that it expected the deal to close by the end of 2012,
``The Schiff portfolio includes strong brands in three of the largest health supplement segments including joint Care (Move Free), cardiovascular health (MegaRed) and immune support (Airborne),'' it said.
Bayer chief executive Marijn Dekkers took the post in 2010 with a reputation for being able to handle transformational takeovers, but the Schiff deal is the latest in a line of small and medium-sized acquisitions.
In September, Bayer agreed to buy Teva's U.S. animal health operations for up to $145 million, following the purchase of AgraQuest, a developer of fungi-killing bacteria to fight plant disease, for at least $425 million.
Bayer said third-quarter adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 2.2 percent to 1.85 billion euros ($2.39 billion), broadly in line with the average estimate in a Reuters poll.
Reported net income, however, dropped a worse-than-expected 17.8 percent as the company set aside a further 200 million euros for litigation in connection with its Yasmin/Yaz birth control pills, which DZ bank analyst Peter Spengler said added a ``negative touch''.
U.S. health regulators in April added warnings to the labels on the popular class of birth control pills that includes Bayer's Yaz and Yasmin, to show they may raise the risk of blood clots.
Bayer said on Tuesday it had so far agreed to pay a combined $750 million to settle 3,490 legal claims that Yasmin caused blood clots, and such injuries are alleged in a further 3,800 pending cases.