Merck KGaA finds consumer health buyer in P&G for €3.4bn

pharmafile | April 19, 2018 | News story | Sales and Marketing Merck KGaA, P&G, Pfizer, biotech, drugs, pharma, pharmaceutical 

Merck KGaA has successfully found a buyer for its healthcare unit, after Proctor & Gamble announced that it was prepared to part with €3.4 billion to gain the rights to a portfolio that includes Seven Seas and Bion3 supplements.

To push the deal through, it is assumed that Merck had to climb down slightly on its valuation of the business, which it had initially pegged at around €4 billion. However, now that the deal has gone through, the company will be able to focus on its pharmaceutical business and potentially use the extra cash to grow its pipeline.

The company’s decision not to play hardball on price may well have been influenced by watching Pfizer’s failure to offload its on healthcare business.

Pfizer had a firm valuation of the business at $20 billion, a figure that all of the companies interested in taking on the business were disinclined to match.

GSK, for instance, took a look at the possibility before deciding to spend $13 billion buying Novartis out of their joint healthcare venture.

While P&G had actually previously shown interest in Pfizer’s unit, which is three times the size of Merck’s, but did not want to pay more than $15 billion for it.

All of which meant that Pfizer has been unable to find a buyer and has spent a large amount of time for no productive end – clearly Merck did not want this to be the case in its own sale.

“We like the steady, broad-based growth of the OTC Health Care market and are pleased to add the Consumer Health portfolio and people of Merck KGaA, Darmstadt, Germany, to the P&G family,” said David Taylor, Chairman of the Board, President and Chief Executive Officer.

P&G’s acquisition will see 3,300 Merck employees move over as part of the transaction, which is expected to close during the 2018/2019 financial year.

The steady growth Taylor references is the fact that Merck has achieved 6% growth for the last two years. However, Merck wants to pull away from this sector because pharmaceuticals can offer for greater return – though with an equivalent risk of any potential drug failures, as it is has found after being stung by trial failures with Bavencio.

Ben Hargreaves

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