Bayer in exclusive talks to acquire Merck’s consumer business for about $14 billion

Both sides agree to deal in principle, but details still being worked out

Bayer’s over-the-counter portfolio is anchored by the iconic pain pill aspirin. It is the third-biggest company in over-the-counter drugs by sales. Photographer: Alastair Miller/Bloomberg

Bayer’s over-the-counter portfolio is anchored by the iconic pain pill aspirin. It is the third-biggest company in over-the-counter drugs by sales. Photographer: Alastair Miller/Bloomberg

Sat, May 3, 2014, 01:03

Bayer is in exclusive talks to acquire Merck’s consumer business and is prepared to pay about $14 billion for the division, people with knowledge of the matter have said. An announcement is likely to come in the next few days.

While the two sides have agreed to a deal in principle, they are still working out details and have not formally reached an agreement, they said. The terms would include cash and an exchange of pharmaceutical assets, possibly structured as a joint venture.

A deal would strengthen Merck’s core drug business while helping Bayer to beef up its consumer-products line by adding brands. It would be similar to other recent pharmaceutical transactions, in which companies have sold weaker business lines and added to areas where they are more competitive.

Companies including Reckitt Benckiser, Procter & Gamble and Sanofi had made bids for Merck’s over-the-counter business. Reckitt said it was withdrawing from talks because the unit had become too expensive. Still, if Bayer and Merck do not complete a deal, previous bidders and other potential suitors could reconsider the asset.

When Merck, based in Whitehouse, New Jersey, first put the maker of Claritin allergy medicine and Coppertone sunblock up for sale, it was expected to fetch about $10 billion. Other companies are reworking their businesses as well.

In April, GlaxoSmithKline sold its oncology portfolio to Novartis for $14.5 billion. Novartis sold Glaxo its vaccines business for $5.25 billion and sold its animal-health unit to Eli Lilly for $5.4 billion.

Bayer’s over-the-counter portfolio is anchored by the iconic pain pill aspirin. It is the third-biggest company in over-the-counter drugs by sales, behind Johnson & Johnson and Glaxo, according to a ranking compiled by Glaxo for the announcement of its deal with Novartis.

Merck shares rose 1.8 per cent to $59.62 in New York yesterday, their highest level since January 2008. – ( Bloomberg)