P&G Nears Deal to Acquire Merck KGaA's Consumer-Health Unit

Hope Soto
April 22, 2018

Merck KGaA is to sell its consumer health business to Procter and Gamble for $4.2 billion, continuing the trend for big pharma companies to rethink their investment in over-the-counter products. The company has been under consistent pressure to improve performance with its stock price falling 13 percent in the past year.

In September 2017 Merck had said that it was preparing strategic options for its consumer health business, including a potential full or partial sale of the business as well as strategic partnerships.

It also offers P&G with healthcare commercial and supply capabilities, deep technical mastery and proven consumer healthcare leadership.

"With P&G we have found a strong, highly recognised player who has the necessary scale to successfully drive the business going forward", he said. In turn, the American company said it will increase the unit's geographic presence and strengthen its existing positions in the world's top OTC markets.

"We like the steady, broad-based growth of the OTC Health Care market", P&G CEO David Taylor said in a press release.

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German Merck has been considering a sale of the business since late previous year, and had according to Reuters had attracted suitors such as Nestle, Perrigo, and Stada owners Bain and Cinven.

The company has clearly chose to quit consumer health while it is ahead - the unit's net sales grew organically by 6% between 2015 and 2017, outpacing the consumer health market's growth of approximately 4% over the same period.

German company Merck KGaA provides a broad range of OTC products and is active across 44 countries and includes more than 900 products.

The transaction will be executed through the sale of Merck KGaA's shares in a number of legal entities as well as various asset sales. As part of the transaction, approximately 3300 employees, mainly from Merck KGaA's Consumer Health business, will transition to P&G upon completion of the transaction.

The sale of the global consumer health business does not yet comprise the French consumer health business, where P&G has made a binding offer.

Other reports by MaliBehiribAe

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