Biotech Values

[biocqr]

MRK >Bayer Said to Be in Exclusive Talks for Merck Consumer Unit

http://www.bloomberg.com/news/2014-05-01/bayer-said-to-be-in-exclusive-talks-for-merck-consumer-unit-1-.html

Bayer AG is in exclusive talks to acquire Merck & Co.’s consumer business and is prepared to pay about $14 billion for the division, people with knowledge of the matter said.

An announcement is likely to come in the next few days, said the people, who asked not to be identified because the talks are private. While the two sides have agreed to a deal in principle, they are still working out details and haven’t formally reached an agreement, the people said. The terms would include cash and an exchange of pharmaceutical assets, possibly structured as a joint venture, the people said.

A deal would strengthen Merck’s core drug business while helping Bayer to beef up its consumer-products line by adding brands including Claritin allergy relief. It would be similar to other recent pharmaceutical transactions, in which companies have sold weaker business lines and added to areas where they are more competitive.

Companies including Reckitt Benckiser Plc, Procter & Gamble Co. and Sanofi had made bids for Merck’s over-the-counter business. Reckitt said yesterday it was withdrawing from talks because the unit had become too expensive. Still, if Bayer and Merck don’t complete a deal, previous bidders and other potential suitors could reconsider the asset.

Steve Cragle, a spokesman for Merck, said today in a phone interview he had no comment. Guenter Forneck, a spokesman for Bayer, also declined to comment.

Pharma Moves

When Merck, based in Whitehouse, New Jersey, first put the maker of Claritin allergy medicine and Coppertone sunblock up for sale, people familiar with the matter expected it to fetch about $10 billion.

Other companies are reworking their businesses as well. In April, GlaxoSmithKline Plc sold its oncology portfolio to Novartis AG for $14.5 billion. Novartis sold Glaxo its vaccines business for $5.25 billion and sold its animal-health unit to Eli Lilly & Co. for $5.4 billion.

Merck shares rose 1.8 percent to $59.62 at the close in New York, their highest level since January 2008. Bayer, based in Leverkusen, Germany, didn’t trade today because of a holiday in Europe. The company’s U.S. American depositary shares gained less than 1 percent to $139.66.

Bayer’s over-the-counter portfolio is anchored by the iconic pain pill aspirin. It is the third-biggest company in over-the-counter drugs by sales, behind Johnson & Johnson and Glaxo, according to a ranking compiled by Glaxo for the announcement of its deal with Novartis.