Published: Sun, April 22, 2018
Finance | By Kristine Clayton

P&G to acquire 52% in Merck India for Rs 1300cr

P&G to acquire 52% in Merck India for Rs 1300cr

Operating in 44 countries and offering more than 900 products, Merck's Consumer Health division offers a OTC products for a variety of ailments including colds, headaches and pain.

Annual revenue at the prescription-free unit last grew by more than seven percent to 911 million euros in 2017. The company has announced that the sale of its consumer health unit does not alter its business objective of selling the prescribed medicines such as Erbitux for treating cancer and Rebif for multiple sclerosis treatment.

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. "These brands provide great solutions in relieving muscle, joint and back pain, colds and headaches, as well as supporting physical activity and mobility, many of which are treatment areas not now addressed in P&G's portfolio". "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.

Marketing has reached out to P&G for additional details.

P&G, whose other OTC consumer healthcare brands include Pampers, Vicks, Crest, and Gillette, has seen struggling sales and falling share price in part due to growing competition from online and other retailers.

Over three thousand employees of Merck are expected to shift to P&G after the purchase deal is finalized by the fourth quarter of this year.

The company also said under the open offer by P&G, up to 26 per cent of the fully diluted voting equity share capital will be acquired at a price of Rs 1,500.36 per share amounting to Rs 647.53 crore.

The company has clearly made a decision to quit consumer health while it is ahead - the unit's net sales grew organically by 6% between 2015 and 2017, outpacing the consumer health market's growth of approximately 4% over the same period.

Merck KGaA is not the only big pharma that wants to change its consumer health strategy - at the end of March, GlaxoSmithKline paid $13 billion to Novartis to gain full control of an OTC joint venture.

As part of the deal, P&G will buy a majority stake in the German company's Indian consumer health business, Merck Ltd, and subsequently make a mandatory tender offer to minority shareholders.

Like this: