Sector News

Interest waning for Pfizer, Merck KGaA's consumer units: reports

February 6, 2018
Life sciences

Sales of consumer health businesses, once highly sought after, seem to be getting tricky. Reports say that Nestle has stepped back as leader in a deal to buy Merck KGaA’s consumer businesses and Pfizer is said to have only two interested parties, GlaxoSmithKline and Reckitt Benckiser Group, after others decided to pass on the deal.

A month ago, reports suggested Nestle had become the lead bidder for Merck’s unit ahead of other interested parties, including consumer focused Reckitt Benckiser. However, citing unnamed sources on Friday, Reuters reported that Nestle had backed off over Merck’s expectation that the unit should bring up to 20 times core earnings sales, a measure that would put the price at about €4 billion ($4.99 billion). The unit does about $1 billion a year in sales.

A spokesman for Merck told Reuters “the process of evaluating options for our consumer health business is well on track.” Nestle declined to comment.

Besides price, Nestle was thought to be influenced by activist investor Dan Loeb, whose Third Point fund last year made a $3.5 billion investment in Nestle. Loeb has pushed the Swiss company toward investing in other high-growing areas like pet care and bottled water.

Reckitt Benckiser, a potential back-up bidder, is said to be more interested at this point in buying Pfizer’s consumer business.

Bloomberg, citing unnamed sources, indicated today that both Nestle and Johnson & Johnson have dropped out as potential bidders for Pfizer’s consumer unit, leaving GlaxoSmithKline and Reckitt Benckiser to fight over a business that is projected to cost $15 billion to $20 billion. The deadline for non-binding bids was Thursday and final bids are expected in a few weeks.

Pfizer CEO Ian Read last year said he was interested in offloading the consumer health business, a move that would raise cash for investing in higher growth areas. He said Pfizer would look at all options, including an asset swap or a spinoff, “depending on how we create maximum value.”

Bloomberg reported that potential buyers had some concerns about the consumer unit’s flat sales at a time when new competitors, like online retailers, might be looking to get into the game. Pfizer last week reported full-year 2017 earnings in which the consumer business saw sales that were up just 2% for the year at $3.47 billion and flat in the fourth quarter at $950 million.

A spokeswoman told Bloomberg that Pfizer is still considering all its options for the consumer unit, including a swap or a spinoff, but also might just hold onto it. She said a decision will be made in 2018.

By Eric Palmer

Source: Fierce Pharma

comments closed

Related News

March 24, 2024

Johnson Matthey to sell its Medical Devices business for $700 million

Life sciences

Johnson Matthey Plc (JM; London) announced that it has signed a definitive agreement to sell 100% of its Medical Device Components business (MDC) to Montagu Private Equity (Montagu) for cash consideration of US$700 million (£550 million) on a cash free debt free basis.

March 24, 2024

Lonza acquires biologics manufacturing plant in California from Roche

Life sciences

Lonza AG (Basel, Switzerland) announced it has signed an agreement to acquire the Genentech large-scale biologics manufacturing site in Vacaville, Calif. from Roche (Basel, Switzerland) for $1.2 billion. The acquisition will significantly increase Lonza’s large-scale biologics manufacturing capacity.

March 24, 2024

Roquette to acquire IFF Pharma Solutions to boost global excipient presence

Life sciences

Roquette plans to acquire International Flavors & Fragrances (IFF) Pharma Solutions for an enterprise value of up to €2.85 billion (US$3.09 billion). With the acquisition set to close in the first half of 2025, the plant-based ingredient and pharmaceutical excipients supplier aims to reinforce its position in the pharmaceutical industry.

How can we help you?

We're easy to reach