Sector News

Nestle, Stada prepare rival bids for Germany's Merck consumer health: sources

December 4, 2017
Life sciences

Swiss food giant Nestle and the private equity owners of German drug firm Stada are both preparing tentative bids for Merck KgaA’s consumer health unit, several sources told Reuters.

Merck’s financial adviser JPMorgan has invited bids for the business, which is valued at about 4 billion euros ($4.8 billion), ahead of a Dec. 15 deadline, the sources said.

Nestle is widely seen as a natural buyer for the maker of Seven Seas vitamins and Bion nutritional supplements, after previous talks to set up a consumer joint venture with Merck fell through over the summer.

Bain and Cinven, who earlier this year took control of Germany’s Stada, are hoping to use the Merck unit as a buy-and-build platform for Stada, which makes generic drugs and consumer care products and had annual revenues of more than 2 billion euros in 2016, the sources said.

The private equity firms are making an opportunistic move on Merck consumer health as they want to have options to build on the business they have with Stada, one of the sources said.

Other buyout funds which do not have a presence in the consumer and healthcare industries and would not be able to use existing portfolio companies as an acquisition vehicle have been advised against entering the process, they said.

Merck, which declined to comment, has seen enough interest from industry buyers, they said, pointing to takeover appetite from emerging markets.

Nestle, Stada, Cinven and Bain all declined to comment.

Merck’s vitamins and nutritional supplements would fit Nestle’s ambition to expand in consumer healthcare, a fast-growing area CEO Mark Schneider has made a priority.

Nestle has also been offered the $20 billion consumer health business that U.S. drug giant Pfizer is selling, the sources said.

But Merck’s portfolio is smaller and less diversified than Pfizer’s and would keep Nestle closer to its core strength in packaged food, the sources said.

Nestle, which wants to become a “nutrition, health and wellness company,” promised shareholders in September that moving into consumer health would not be “a carte blanche for reckless diversification.”

Consumer health is a fragmented sector ranging from over-the-counter medicines and vitamins to sports nutrition products and condoms. It has proved fertile ground for deals in recent years, as aging populations and health-conscious consumers drive demand.

Stada’s owners are also mulling bids for the generic drug business being sold by Sanofi, the sources said, and might favor this combination over Merck as generic drugs are typically valued at a cheaper multiple.

Merck said in September that it would consider selling the $1 billion-a-year consumer health unit to help fund more research into prescription drugs.

($1 = 0.8401 euros)

By Pamela Barbaglia, Ludwig Burger, Patricia Weiss

Source: Reuters

comments closed

Related News

June 24, 2022

Echosens and Novo Nordisk announce partnership to increase awareness and advance early diagnosis of NASH

Life sciences

Echosens, a high-technology company offering liver diagnostic solutions, and Novo Nordisk A/S, a leading global healthcare company, announced a partnership to advance early diagnosis of non-alcoholic steatohepatitis (NASH) and increase awareness of the disease among patients, healthcare providers and other stakeholders.

June 24, 2022

argenx receives positive CHMP opinion for Efgartigimod for the treatment of adult patients with Generalized Myasthenia Gravis in Europe

Life sciences

Positive opinion based on Phase 3 ADAPT trial showing efgartigimod provided clinically meaningful improvements in strength and quality of life measures. If approved, efgartigimod will be the first neonatal Fc receptor (FcRn) blocker for the treatment of adults in Europe living with rare neuromuscular disease generalized myasthenia gravis (gMG).

June 24, 2022

Galapagos finally takes M&A plunge, spending $251M for 2 biotechs in CAR-T push

Life sciences

Galapagos CEO Paul Stoffels, M.D., has finally taken the plunge on M&A. The newly minted chief executive has signed not one but two deals in an attempt to right the ship, bringing two small biotechs aboard for a combined 239 million euros ($251.4 million).