Mylan in advanced talks for Merck KGaA's $4B-plus OTC unit: report

Merck kgaa
Merck KGaA announced last September that it would pursue a sale of its OTC business. (Merck KGaA)

Pfizer may have run into snags trying to sell its consumer health business, but Merck KGaA may be in advanced discussions with a player over its own for-sale unit. And that player is Mylan, according to reports.

The two companies are negotiating a price between $4.3 billion and $4.9 billion, Reuters says, although there’s no certainty they’ll lock down a deal. The German drugmaker has also reportedly chit-chatted with private equity groups about a sale, according to the news service.

Mylan, for its part, denies the report. "Although it’s Mylan’s policy to not comment on rumors or speculation, given the egregious inaccuracy of reports issued this morning, the company is compelled to confirm that the Reuters article is untrue," the company said in a statement. 

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RELATED: Merck KGaA mulls sale of undersized consumer health unit

Merck KGaA first said that it was considering a sale last September, pointing to “increasing internal constraints to fund” the consumer health business.

These days, though, there’s less competition for the buy. Companies including Nestlé, which is working to expand further into healthcare, and consumer giant Reckitt Benckiser, have already dropped out of the running.

It’s not the first time Mylan has gone after a deal in the consumer biz. It spent the better part of 2015 in hostile pursuit of store-brand specialist Perrigo, whose shareholders ultimately rejected Mylan’s offer. And in the wake of that offer, it snapped up Sweden’s Meda.

With the U.S. generics sector now in turmoil, diversification for the knockoffs giant has been more important than ever. Bernstein’s Ronny Gal wrote to clients Tuesday that Mylan is in a decent place under the circumstances, noting that the “downside scenario based on U.S. price erosion is moderate” thanks to boosts from Mylan’s growing biosimilar share and outside-the-U.S. products.

It’s also not the first time Mylan and Merck KGaA have talked transaction, Reuters noted. Back in 2007, Mylan took Merck’s generics unit off its hands in a $6.7 billion deal that also sent severe allergy blockbuster EpiPen over to the copycat.

Meanwhile, Pfizer, which boasts a larger OTC business than Merck’s, has been watching its own sale options dwindle as retail kings such as Amazon threaten OTC drugmakers’ sales. Late last month, both Reckitt and GlaxoSmithKline withdrew from the bidding process, though rumor has it there’s a small chance the New York drugmaker could still unload the asset to Procter & Gamble.  

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