Boston, MA 05/02/2014 (wallstreetpr) – Merck & Co., Inc. (NYSE:MRK) is reported to be in exclusive asset sale talks with the German pharmaceutical giant Bayer AG, according to the people with insider knowledge. Talks with Bayer for the sale of Merck’s over-the-counter business comes on the back of a withdrawal of one of the front bidders. However, sources say that bidders that have been edged out could return for talks in case the current talks fail to lead to a transaction.
Merck like most other big pharmaceuticals in recent times is unloading its consumer business division so as to focus on core drug business.
The results of the talks between Merck and Bayer could come in the next few days, according to sources that cannot be identified because the discussions are private. Representatives from the two companies have remained mum over the matter so far.
Bidder withdrawal
Reckitt Benckiser Plc that was one of the final contenders for the purchase of Merck’s consumer health business withdrew from the contest citing the high price of the business. Others such as Sanofi SA (ADR) (NYSE:SNY) and Procter & Gamble Company (NYSE:PG) were edged out of the bidding contest, but they still harbor interest for the business and are waiting on the wings to return in case the current talks flop.
The consumer health asset that is currently up for grabs was initially expected to fetch about $10 billion in a transaction. However, according to the sources, the ongoing talks could value the asset at $13.5 billion and eventually $14 billion when the deal closes.
Ongoing talks
Though the deal is possible and sources say the next few days could see big announcements, Merck & Co., Inc. (NYSE:MRK) and Bayer have just agreed in principle and many aspects of the deal are still in the works. The transaction terms for the consumer health business is likely to include cash and a swap of pharmaceutical assets as has become commonplace in recent pharmaceutical deals.
Pharmaceutical moves
The reported asset sale talks between Merck & Co., Inc. (NYSE:MRK) and Bayer only mirrors what has become of the drug industry these days. Pharmaceutical companies can be seen giving up assets in areas that they are not competitive to focus on mainstay products. Recently GlaxoSmithKline PLC (ADR) (NYSE:GSK) and Novartis AG (ADR) (NYSE:NVS) announced a deal that would see a swap of assets and joint venture between the giant drug companies.
