P&G to Acquire Merck Consumer Health Unit in a $4.2 Billion Deal

Procter & Gamble agreed to acquire the consumer health business of German pharmaceutical company Merck Group for $4.21 billion. The deal would provide P&G capabilities and portfolio scale in the global over-the-counter business.

The companies announced the agreement on Thursday. According to the Wall Street Journal report, both companies are getting close to a deal.

P&G signed to acquire 51.8% equity stake in Merck’s Indian arm and Merck Ltd. from three promoter group entities: Emedia Export Company MBH, Merck Internationale Beteilingungen GmbH, and Chemitra GmbH, which have the share capitals of 21.29%, 18.62%, and 11.89% percent respectively.

As a result, the deal makes the Cincinnati-based healthcare company giant P&G expand its consumer health business by adding vitamins and medications. In addition, this acquisition will help the company extend its geographic reach to its customers.

The Merck KGaA is a leading business manufacturer of over-the-counter products. It generates around $1 billion annual sales from a portfolio of 10 core brands.

Furthermore, some of Merck’s products are vitamins, Febimion supplements for women, Seven Seas cod liver oil, and nasal decongestant Nasivin.  It also tests and develops new drugs such as Bavencio, a medicine for cancer.

The P&G’s deal with Merck is one of the company’s biggest acquisitions in the recent years. P&G has been struggling with its Gillette razor’s slow growth and falling revenue. The deal is expected to close in December 2018.

$1 Billion Business

According to P&G, the deal will improve the company’s geographic scale for over-the-counter healthcare products. Merck’s $1 billion consumer health business rose 6 percent over the past two years.

“We like the steady, broad-based growth of the OTC Health Care market and are pleased to add the consumer health portfolio,” said Procter & Gamble’s CEO David Taylor.

Similarly, Merck agreed to the deal because its emerging development of performance materials and prescription drugs, such as cancer immunotherapy and multiple-sclerosis drugs, makes the company want to focus on its pharmaceutical business.

Also, the company said that it wouldn’t have the money to bolster the consumer health division as well as to test new drugs. Finally, Merck CEO Stefan Oschmann said that the deal is an “important step in our strategic focus on innovation-driven businesses.”

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