Merck KGaA prefers the long-term hold to the quick cash-out. The German company says it plans to hang on to its consumer health unit, despite the prospect of a premium sale price--and the unit's small-fish size.
Merck's consumer business boasts Seven Seas vitamins and Bion probiotics brands, among others--and therein lies the question. U.S.-based Schiff, with its own stable of supplements, fetched a nice offer from Bayer last month. And then, Reckitt Benckiser stepped in with an even better one. Why not Merck's unit?
One answer, Reuters says, is that Merck's founding family, which still holds controlling interest, likes the business. "Consumer Health is not for sale," the company told Reuters. "Instead, we are currently improving the unit's profitability. All governing panels at Merck are in agreement over this."
Management may not be, however; as Reuters notes, CEO Karl-Ludwig Kley said earlier this year that he was interested in selling the unit. Analysts figure the unit could fetch €1.5 billion ($1.9 million) or more. "There is no lack of interest in the business and management knows it," one investment banker told the news service.
Merck's consumer business generates sales of about €500 million per year, Reuters says, or about $646 million. That's not much compared with the consumer units of fellow drugmakers. Pfizer ($PFE), for instance, has made $2.3 billion off its consumer unit so far this year--and company officials figure that it needs to expand to be truly competitive. But Merck says it's not looking for deals to expand its own consumer business.
- read the Reuters news