Euro woes, Alli questions weigh on GSK sale

GlaxoSmithKline ($GSK) can thank Greece and Angela Merkel if its attempt to sell an OTC drug portfolio stalls. Europe's inability to get its act together is frustrating some M&A, as satisfactory financing is tough to nail down, Reuters reports. So, roiled debt markets are slowing down GSK's sale process, sources tell the news service.

It doesn't help that the sale portfolio isn't exactly cohesive. Some pharma industry bidders--including Germany's Stada--would like to get their hands on pieces of it, rather than the whole thing. Plus, questions about the diet drug Alli are weighing on the deal, too.

Boehringer Ingelheim would like to nab a few of the on-sale meds in strategic geographic areas, the news service reports. Meanwhile, Sanofi ($SNY) didn't like the piecemeal nature of the portfolio--many of the drugs have revenues less than €1 million, a source pointed out--or the risks surrounding Alli, which was initially expected to be a blockbuster but faltered on concerns over side effects.

Some of the sources suggest GSK may end up keeping Alli to facilitate the sale. One said GSK may end up choosing to break the portfolio into pieces for industry buyers.

Analysts had expected the sale to generate £1.5 billion to £2 billion, or up to $3 billion. Second-round bids are expected late next month.

- read the Reuters analysis