Procter & Gamble (P&G) has taken the decision to acquire Merck KGaA’s consumer health unit for an amount of $4.2 billion, giving it vitamin brands such as Seven Seas and an extensive exposure to the Latin America and Asia markets.
The maker of Gillette razors and Pampers said that the deal would aid in expanding its portfolio of consumer healthcare products which includes Vicks cool relief.
The Merck unit has got vitamin brands Femibion and Neruobion in its portfolio.
The deal came after the agreement of GlaxoSmithKline to buy Novartis out of their consumer healthcare joint venture for thirteen billion dollars after giving up on its pursuit of Pfizer’s consumer unit.
The acquiring price for the Merck’s business suggests that the Germany company has descended from the price demands of as much as four billion euros, which as per sources had deterred initial suitors like Nestle, Stada owners Bain and Cinven and Perrigo.
Morgan Stanley Analyst—Vincent Meunier said that this step would help Merck to focus more on its pharma unit and restore its pipeline.
Merck said that this would permit it to reduce its debt on a much faster rate, giving its businesses which includes pharmaceuticals, chemicals and lab equipment much more flexibility although it ruled out procurements above five hundred million euros this year.
Nearly around 3,300 Merck employees could then move to P&G once the transaction is completed, which is expected to happen by the fourth quarter.
As part of the agreement, P&G would purchase a majority stake in the German firm’s Indian consumer health business—Merck Ltd, and would then gradually make a mandatory tender offer to the minority stakeholders.
A final deal with P&G on Merck’s French consumer health business has yet to be devised out with the labour representatives however, that would not change the overall price decided with P&G.
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