UPDATE 2-Reckitt Benckiser says no longer in talks with Merck

Wed Apr 30, 2014 3:48pm EDT

* Germany's Bayer now seen as a leading contender

* No final decision made by Merck (Adds background, context, byline, bullet points)

By Martinne Geller

LONDON, April 30 (Reuters) - Reckitt Benckiser Group said on Wednesday it was no longer in active talks with Merck & Co about buying its consumer health business, leaving Germany's Bayer as a leading contender for the $14 billion business.

Bayer has offered to swap its animal health assets for the Merck consumer business that includes Coppertone sunscreen and pay the remainder of the price in cash, Reuters reported on Tuesday, citing people familiar with the matter.

That swap may have given Bayer a leg up, since Reckitt, known for paying top dollar for attractive assets, backed down.

"We are a highly disciplined acquirer with strict return metrics, which we will not break," said Reckitt Benckiser Chief Executive Rakesh Kapoor in an emailed statement.

"The consumer health market remains highly fragmented and we will continue to evaluate opportunities that fit both our strategic and financial criteria."

Merck has not made a final decision on any sale and there is no guarantee that Bayer will emerge as the winner, people familiar with the matter said on Wednesday.

The auction also drew interest from other healthcare and consumer giants including Boehringer Ingelheim, Sanofi SA , Procter & Gamble Co and Novartis AG, Reuters previously reported.

The consumer health sector has seen a wave of deals as it benefits from ageing populations in the West and rising incomes in emerging markets.

Last week, Prestige Brands Holdings agreed to pay $750 million for the maker of e.p.t home pregnancy tests and Sucrets cough lozenges, while Reckitt last month agreed to buy the global rights for the K-Y intimate lubricant brand from Johnson & Johnson.

Merck and Bayer declined to comment.

Bayer has a diverse portfolio that includes over-the-counter remedies such as Aleve and Alka-Seltzer and an animal health business with annual sales of 1.3 billion euros ($1.8 billion).

In 2012, Bayer lost out to Reckitt in the battle for Schiff Nutrition, after Reckitt offered $1.3 billion for entry into the U.S. vitamin and supplements market.

Reckitt, which also makes Mucinex and Nurofen medicines, said on Monday that it was in talks to buy Merck's consumer business, the latest asset up for grabs in a string of healthcare deals. (Reporting by Martinne Geller in London; Additional reporting by Frank Siebelt in Frankfurt; Editing by Keiron Henderson and Robin Pomeroy)

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