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

December 3, 2022

Sanofi moves into swanky new Paris HQ designed around hybrid work and sustainability

Life sciences

Monday, the French pharma giant officially moved into its new global home base in Paris, dubbed La Maison Sanofi. The 9,000-square-meter (about 96,875-square-foot) facility comprises two historic buildings and will host around 500 employees, the company explained in a release.

December 3, 2022

As CEO Schultz eyes retirement, Teva taps former Sandoz head Francis as its next leader

Life sciences

On the first day of the new year, former Sandoz chief Richard Francis will take the reins from Schultz, who is hanging up his CEO hat to retire on Dec. 31, Teva said Monday. The news comes a little more than two weeks after Teva publicly said it was looking for Schultz’s replacement.

December 3, 2022

General Electric sets healthcare division spinoff plans

Life sciences

General Electric Co. set the terms for the spinoff of its healthcare division, putting an initial value of roughly $31 billion on the soon-to-be-public company. The Boston conglomerate plans to split into three separate public companies by early 2024. Following the healthcare spinoff, it plans to separate its aerospace business from its power and renewable-energy units.