When bidding wars get hot, that often springs information leaks. The latest is that there is some swap-and-shop haggling going on between Bayer and Merck ($MRK) over Merck's consumer health business. That, at least, is what sources are telling Reuters.
The news service says that Bayer has offered Merck its animal health business and then would conclude a deal in cash, a move that they seem to think would give it an edge over Reckitt Benckiser, the U.K. company that is also reportedly a front-runner in the race to buy Merck's OTC operations for a price expected to be around $14 billion. Rumors of negotiations have been percolating for weeks, and it is expected that a deal could be announced at any time.
Merck wants to be more focused and has said that it needs to either divest or strengthen its consumer health and animal health businesses as part of its restructuring moves. This kind of deal with Bayer would achieve both and so might make it a very appetizing prospect.
Trading for assets is not a new idea where Merck is concerned. In January, Merck CEO Ken Frazier was reportedly talking with Novartis about swapping his company's consumer health business for Novartis' ($NVS) vaccine and animal health operations. That deal didn't materialize, and last week Novartis instead agreed to sell its animal health business to Eli Lilly ($LLY), and then sell its vaccine business to GlaxoSmithKline ($GSK) while buying GSK's oncology assets. Novartis and GSK then topped off their three-part maneuver with a joint venture in which GSK will operate their dual consumer health operations.
Analysts this week have also suggested that Bayer might be on the hunt for new assets and mentioned a possible offer for Zoetis ($ZTS), the animal health business that Pfizer ($PFE) spun off last year. Bayer's animal health business had sales of about €1.3 billion ($1.8 billion) last year, Reuters reports. Sources have also told Bloomberg that the German company might sell its plastics business, which could generate €7.8 billion ($10.8 billion), to help fund some deals.
- read the Reuters story
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