| NEW YORK
NEW YORK Jan 31 Merck & Co Inc has
received approaches from large consumer companies interested in
buying its consumer healthcare business, best known for
Coppertone sunscreen and Claritin allergy medicine, according to
people familiar with the matter.
Merck's consumer healthcare business, which also includes
Dr. Scholl's foot care and other consumer products, could be
worth as much as $8 billion to $10 billion in a sale, or roughly
four to five times the unit's annual revenue, some of the people
Merck, the No. 2 U.S. drugmaker after Pfizer Inc, is
considering alternatives for both its consumer and animal health
businesses and has said it expects to complete the review in
Among a range of options it has considered for the consumer
unit, Merck discussed a potential asset swap with Novartis AG
, under which Merck would give up its consumer assets
in return for the Swiss drugmaker's animal health and other
units, Reuters and others previously reported.
The probability of carrying out such a deal, however, is
currently seen as low due to the complexity of valuing different
businesses, prompting Merck to explore an outright sale of its
consumer unit as well, people familiar with the matter said.
Merck has been in conversations with several interested
parties and is being advised by Morgan Stanley on the
process, the people said, asking not to be named because the
conversations are private.
For its much larger animal health unit, the second-largest
in the industry after Zoetis Inc, Merck is evaluating
the potential of spinning it off as a separate publicly traded
company, people familiar with the matter said.
Analysts and people familiar with the industry say big
consumer companies such as Reckitt Benckiser Group and
Procter & Gamble Co could be logical buyers for Merck's
consumer healthcare business.
Reckitt already owns over-the-counter medicines including
Mucinex and Nurofen and the international rights for the Scholl
foot care business. Its chief executive told Reuters in a
September interview that Reckitt aimed to be a major player in
consumer healthcare and has the firepower to do sizeable deals.
Procter & Gamble Co also has a portfolio that
includes a range of medicines and beauty products.
Reckitt and P&G declined to comment.
Johnson & Johnson is the biggest player in the $200
billion global consumer health industry, with about 4 percent of
the market, followed by Bayer AG and GlaxoSmithKline
Merck, however, is relatively small with around 1 percent of
the market. Merck has said in the past that it views its
consumer business as sub-scale.
In considering options for the consumer and animal health
businesses, Merck is following in the footsteps of other
drugmakers such as Pfizer Inc, which created shareholder
value by seperating non-core assets.
Pfizer sold its infant-nutrition business to Nestle SA
for $11.9 billion in 2012, and last year spun off its
animal health unit as a separate publicly traded company called
Many other drugmakers have been looking to shed businesses,
prompted by pricing pressure and increasing competition that has
forced a more rigorous approach to capital allocation. They have
shown a new willingness to consider whether other companies may
be better owners for certain assets.
A Merck spokeswoman declined to comment on details of the
strategic review. Morgan Stanley did not respond to requests for