Bayer, Novartis said to Eye Merck & Co consumer health unit

21.02.2014 -

A handful of consumer and healthcare companies including Germany's Bayer and Switzerland's Novartis are exploring a deal for Merck & Co's consumer healthcare business, people familiar with the matter told the news agency Reuters.

Reckitt Benckiser and Procter & Gamble Co are also said to be among the companies holding discussions with Merck about buying the unit, which includes products ranging from sunscreen to OTC allergy medicines.

Despite the large size of a potential deal - rumoured to be worth as much as $10-12 billion - and the diversity of the product lines, Merck is reportedly focused on selling the consumer health business in its entirety. The U.S. drugs group is expected to seek second-round offers in late March.

Bayer already has a strong portfolio of consumer products but is known to be looking at deals to expand the business further. In 2012, it lost a bidding war with Reckitt for Schiff Nutrition International, which went to the British group for $1.3 billion.

Reckitt's chief executive told Reuters in September of last year that the company aimed to be a major player in consumer healthcare and has the firepower to do sizeable deals.

Procter & Gamble also has a portfolio that includes a range of health products, cold and flu treatment and heartburn medication.

Among a range of options considered for the consumer unit, Merck has discussed a potential asset swap with Novartis. This would see Merck give up its consumer assets in return for the Swiss drugmaker's animal health and other units.

Such a deal is regarded as unlikely, due to the complexity of valuing different businesses; however, Novartis remains interested, and could offer cash instead if an asset swap does not pan out, Reuters' sources said.

Johnson & Johnson is the biggest player in the $200 billion global consumer health industry, with about 4% of the market. Bayer, GlaxoSmithKline, Novartis, Pfizer and Sanofi are also major players, each with a market share of more than 1%. Merck itself has only 1% of the market.