P&G to acquire Merck KGaA consumer health unit

P&G to acquire Merck KGaA consumer health unit

P&G to acquire Merck KGaA consumer health unit

Chief executive officer (CEO) Stefan Oschmann first raised the possibility of a sale when he described the prescription-free business as being too small as an individual unit at Merck and announced a desire to focus more on the expensive development of prescription drugs.

For the full year 2017, net sales of the consumer health business amounted to 911 million euros ($1.1 million).

"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.

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"P&G's global scale and strategic interest in the health and well-being of consumers provide an excellent basis for accelerating growth, leveraging our teams' capabilities and expanding the Consumer Health business profitably". "The Consumer Health business of Merck ... brings a strong set of brands, products and capabilities, and provides an attractive and complementary footprint to further fuel growth as we continue to grow our existing leading brands".

The company has clearly made a decision 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 Merck has been considering a sale of the business since late a year ago, and had according to Reuters had attracted suitors such as Nestle, Perrigo, and Stada owners Bain and Cinven.

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The transaction will be done through the sale of shares in a number of legal entities as well as various asset sales of Merck KGaA.

Merck KGaA's consumer health businesses, whose brands include Neurobion, Dolo-Neurobion, Femibion, Nasivin, Bion3, Seven Seas and Kytta, along with many others, generate almost $1 billion in annual sales. The company has sold off under-performing brands in the past decade, and about 3,300 Merck employees could move to P&G.

Market researcher Euromonitor notes that, in 2017, P&G was the ninth largest global consumer health corporation in terms of retail value.

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P&G will also buy a majority stake in Merck KGaA's consumer health business in India, Merck Ltd, and make a mandatory tender offer to minority shareholders.

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