Merck KGaA to Sell Consumer Health Biz to Procter & Gamble for $4.2 Billion

On April 19, 2018, Merck KGaA announced that it has signed an agreement to sell its global Consumer Health business to Procter & Gamble (P&G) for approximately EUR 3.4 billion in cash, or approximately USD$4.2 billion at current exchange rates. The transaction is expected to close by the end of the fourth quarter 2018, subject to regulatory approvals and satisfaction of certain other customary closing conditions.

“The divestment of the Consumer Health business is an important step in our strategic focus on innovation driven businesses within Healthcare, Life Science, and Performance Materials. It is a clear demonstration of our continued commitment to actively shape our portfolio as a leading science and technology company. The attractive price reflects the high asset value and the performance Consumer Health has delivered,” said Stefan Oschmann, chairman of the executive board and CEO of Merck KGaA, in a company press release. “Consumer Health is a strong business that deserves the best possible opportunities for its future development. With P&G we have found a strong, highly recognized player who has the necessary scale to successfully drive the business going forward.”  

“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 marketed portfolios, product pipelines, and geographic footprints of both businesses are highly complementary,” said Belén Garijo, member of the executive board of Merck KGaA and CEO Healthcare, in the press release. “With this transaction, we continue to rigorously deliver on our strategy to become a global specialty innovator and bring breakthrough medicines to patients.”

“We like the steady, broad-based growth of the OTC [over the counter] healthcare market and are pleased to add the Consumer Health portfolio and people of Merck KGaA, Darmstadt, Germany, to the P&G family,” said David Taylor, P&G chairman of the board, president, and CEO, in the press release.

“These leading brands and the great employees of the Consumer Health business of Merck KGaA, Darmstadt, Germany, will complement our Personal Health Care business very well,” added Tom Finn, president, P&G Global Personal Health Care. “This acquisition helps us continue to drive sales and profit growth for P&G by providing the capabilities and portfolio scale we need to operate a winning global OTC business.”

Transaction details

Net sales of Merck KGaA’s Consumer Health business grew organically between 2015 and 2017 by 6%, outpacing the consumer health market’s growth of approximately 4% over the same period, the company reports. For the full year 2017, net sales of the Consumer Health business amounted to EUR 911 million (USD$1.1 billion).

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. The deal comprises the Consumer Health business across 44 countries, including more than 900 products and two Consumer Health-managed production sites in Spittal, Austria, and Goa, India. As part of the transaction, approximately 3300 employees, mainly from Merck KGaA’s Consumer Health business, will transition to P&G upon completion of the transaction.

At this time, the transaction does not comprise the French Consumer Health business, where P&G has made a binding offer to acquire the shares and assets, depending on Merck KGaA, informing and consulting the relevant works council representatives. For the Indian business, P&G will acquire the majority shareholding of Merck KGaA in Merck Ltd., Mumbai, India, a Merck KGaA subsidiary, and will subsequently make a mandatory tender offer to minority shareholders. As part of the transaction, Merck KGaA and P&G have agreed to a number of manufacturing, supply, and service agreements.

Merck KGaA announced in September 2017 that it was preparing strategic options for its Consumer Health business, including a potential full or partial sale as well as strategic partnerships.

Source: Merck KGaA