Reckitt agreed to buy K-Y last year but encountered opposition from UK authorities who said the deal would reduce competition and result in higher prices for consumers. The CMA asked the company put forward measures to allay their concerns, but its initial proposals were unsuccessful.
The company's plan to purchase the K-Y business in New Zealand was also blocked due to anti-competitive concerns. Reckitt chief Rakesh Kapoor isn't too concerned since the bulk of K-Y sales come from the U.S., Canada and Brazil.
Under Mr. Kapoor, Reckitt is moving into higher margin consumer health products. The strategy appears to be working. H1 comps were up 13%.
Merck (MRK) could agree a deal to sell its consumer healthcare operations this week for almost $14B, Reuters reports, with Germany's Bayer (BAYRY) and U.K.-based Reckitt Benckiser (RBGLY) the frontrunners to buy the unit.
Other healthcare consumer giants have also also shown interest in the business, including Procter & Gamble (PG), Novartis (NVS) and Sanofi (SNY).
Merck is looking to sell the operations as it only holds around 1% of the market.
A deal would be the latest in a wave of blockbuster transactions to have swept the healthcare sector recently, such as Pfizer's $100B+ reported offer to acquire AstroZeneca, Valeant and Bill Ackman's $47B play for Allergan, Zimmer's agreement to purchase Biomet for $13.35B, and a series of deals involving Novartis, GlaxoSmithKline and Eli Lilly.
Final offers could value the unit at $10-12B and are due in next week.
Reckitt Benckiser (RBGLY) is the frontrunner, having become the most aggressive bidder.
"OTC assets are highly desirable for market incumbents as almost no additional infrastructure is required," says Barclays. Merck's unit would be a "good fit" geographically for Sanofi, as 70% of its revenue comes from the U.S.