One potential suitor turns its back on Merck unit

Reckitt Benckiser ceases its efforts to buy Merck's (MRK -0.3%) OTC business saying that the bidding has gotten out of hand. Yesterday, Bayer (BAYRY +1.2%) reportedly offered to trade its animal health business to Merck plus cash. This would appear to give it the upper hand versus Reckitt considering comments from Merck CEO Ken Frazier that each of his firm's businesses needs to be a top player or get out. Its animal health business is a laggard but adding Bayer's would vault it into the top tier.

Observers believe the Merck unit will fetch ~$14B.

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Comments (2)
  • Small Pharma Analyst
    , contributor
    Comments (780) | Send Message
    When Merck merged with Schering Plough in 2009, the FTC required them to divest their interest in the Merial animal health division since the combined animal health division otherwise would have "anti-competitive." The worldwide animal healthcare market is very small compared to human health so the FTC will not allow any company to gain too large of a market share. In any event, the current combination of Bayer and Merck animal health units would have a combined annual revenue of about $4.5 B, similar to Zoetis, so guess this is OK if there is not much overlap in product offerings. And then I guess Merck can spin off the entire unit like Pfizer did. Anyway, it would be much nicer to trade for some of Bayer's human health drugs but Bayer likely not willing to share their jewels.
    30 Apr 2014, 04:56 PM Reply Like
  • biochemist
    , contributor
    Comments (796) | Send Message
    Good analysis Small Pharma Analyst. If MRK swaps consumer care for Bayer's animal health unit MRK would have a top animal health business again and would also likely keep it as part of the business.
    30 Apr 2014, 06:29 PM Reply Like
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