Don't lose all hope for a Pfizer consumer health sale.
Procter & Gamble is still at the negotiating table, CNBC’s David Faber reports, though “it doesn’t appear likely” the two sides will reach an agreement because “they are far apart on price,” he said.
Whereas Pfizer had been hoping to bring in some $20 billion through a sale, P&G is “hovering closer to a $15 or $16 billion number,” Faber said, adding that “the gap there is simply too large to bridge, at least at present.”
A transaction for the Big Pharma, which put its OTC unit on the block back in October, looked all but impossible after Reckitt Benckiser and GlaxoSmithKline dropped out of the running late last month. Reckitt had tried unsuccessfully to snag a piece of Pfizer’s portfolio, while Glaxo opted instead to buy out Novartis' share of their consumer health joint venture.
Now, though, there could be another JV in the works, Faber said. Pfizer “might pursue a joint venture of some kind, not with Procter & Gamble but the aforementioned two other bidders,” he said, noting that the process was in the early stages.
Of course, Pfizer could decide to keep the unit after all, a scenario some industry watchers have predicted. As a major beneficiary of U.S. tax reform, Pfizer doesn’t need the cash. “[I]f no one is prepared to pay their asking price, then why sell it?” Polar Capital partner Daniel Mahony put it recently to Bloomberg.
Others, though—such as UBS Group’s Michael Leuchten—argue that OTC valuations will only sink as online retailers heap pressure on drugstores.
“The world has changed,” he told the news service. “That means these businesses or assets probably won’t be able to fetch the multiples they have in the past.”
Whatever happens, Pfizer will likely want to wrap things up quickly. “The hope is that in the next few weeks they will reach a conclusion of some kind,” Faber said.