Business Essentials for Professionals


November Date Fixed For Launch Of Sale Of Consumer Health Unit Of Pfizer: Reuters

November Date Fixed For Launch Of Sale Of Consumer Health Unit Of Pfizer: Reuters
Paving the way for a potential $15 billion-plus sale of the headache pill to lip balm business, Pfizer plans to kick off an auction process for its consumer healthcare business in November, according to Reuters.
Interest in bidding for the unit, which had sales of about $3.4 billion in 2016, have been expressed by several global companies, including GlaxoSmithKline and Reckitt Benckiser.
First mooted on Oct. 10, when Pfizer said it was considering strategic options for the unit, the prospective sale is being led by Centerview Partners, Guggenheim Securities and Morgan Stanley.
Reuters reported one of the sources as saying that he U.S. drugmaker wants to get the ball rolling before the end of this year even as preliminary discussions with interested parties including Reckitt have already taken place.
She would look “carefully” at the business, confirmed GSK Chief Executive Emma Walmsley.
Citi has bene hired by the British drugmaker for the auctions.  There were no comments available from GSK and Citi.
Procter & Gamble, Sanofi, Johnson & Johnson and Nestle are among the other possible bidders, according to sources.
Reuters reported that in around three weeks time, financial information about the consumer unit to prospective buyers is being planned to be sent by Pfizer.
As bids come in and a deal could be sealed around the middle of 2018, the process is expected to heat up early next year, sources said.
Germany’s Merck KGaA has hired JP Morgan to sell its its consumer health business unit, best known for making Seven Seas vitamins, as the company looks to divest the unit.
But since the sale risked being eclipsed by the Pfizer auction, therefore Merck could put the divestment, estimated to be worth around $4.5 billion, on hold, reports said.
With well-known brands include painkiller Advil, Centrum multivitamins and lip balm Chapstick., Pfizer believed keen competition would allow it to raise at least $20 billion from the sale of the business, one source reportedly said.
The consumer health sector has proved a fertile ground for deal-making in recent years as aging populations and health-conscious consumers drive demand for self-medication.
She expected more merger activity, with GSK in a strong position to act as a “consolidator”, said GSK’s Walmsley even as the industry remains fragmented.
Consumer remedies sold over the counter are typically very long-lasting brands with loyal customers although they have lower margins than prescription drugs.
Because it might be worth more outside the group and it was not integral to the core prescription drug business, therefore the company was considering the sale of consumer healthcare, said Pfizer Chief Executive Ian Read.
Creating a diverse portfolio in which consumer health offers a hedge against riskier prescription drugs, GSK however has taken a different view and has opted to retain the unit.
Compared to its household business, its over-the-counter medicines offer higher-margin growth for Reckitt. He would weigh a bid if Pfizer’s strategic review resulted in a sale, said Chief Executive Rakesh Kapoor, who last week announced plans to separate Reckitt into health and home and hygiene divisions.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc