If you thought Merck KGaA would press pause on selling its consumer health unit until Pfizer’s was off the market, think again.
The German drugmaker this week started reaching out to prospective buyers and offering up confidential financial and commercial info about its unit, the Financial Times reports. The move signals that Merck—whose consumer portfolio could rake in up to €4 billion in a deal—isn’t afraid of getting stuck in the shadow of Pfizer, whose assets are valued around $14 billion.
And Merck thinks it has good reason not to worry, the FT’s sources say, noting that the two pharma companies could be vying for different buyers. Pfizer’s hawking well-known, mass-market products, such as Centrum and ChapStick, for instance, while Merck’s lineup consists of more scientific pharmacy products.
Then there are the geographic differences. Darmstadt-based Merck generates 60% of its revenues in emerging markets. And it hasn’t tapped markets in the U.S. or China, meaning a potential acquirer would have plenty of room for easy growth.
And the fact that Merck’s division is smaller could be an advantage in the race for a sale, too, because it could attract a broader range of suitors. Industry watchers have said Pfizer’s unit could sell for $20 billion if a bidding war ensues between giants, such as GlaxoSmithKline and Johnson & Johnson.
Merck’s, on the other hand, could appeal to midsized drugmakers or consumer companies, or those that just don’t have the resources to pull off a bigger deal. While Reckitt Benckiser has indicated its interest in Pfizer, for instance, it may not be able to swing a deal in the wake of its hefty Mead Johnson buy.
Right now, though, most of the names floating around as potential buyers for the two units are the same. In addition to GSK, J&J and Reckitt, Sanofi—which has pledged to snag smaller deals in consumer health—and Nestlé, which is pushing further into the healthcare business, have both come up in deal chatter.