Bayer AG is in exclusive talks to acquire Merck & Co’s consumer business and is prepared to pay about US$14 billion for the division, people with knowledge of the matter said.
An announcement is likely to come in the next few days, the sources said, who asked not to be identified because the talks are private. While the two sides have agreed to a deal in principle, they are still working out details and have not formally reached an agreement, the sources said. The terms would include cash and an exchange of pharmaceutical assets, possibly structured as a joint venture, they added.
A deal would strengthen Merck’s core drug business while helping Bayer to beef up its consumer products line by adding brands including Claritin allergy relief products, sources said. It would be similar to other recent pharmaceutical transactions, in which companies have sold weaker business lines and added to areas where they are more competitive, they added.
Companies including Reckitt Benckiser PLC, Procter & Gamble Co and Sanofi SA had made bids for Merck’s over-the-counter business.
Reckitt said it was withdrawing from talks because the unit had become too expensive.
Still, if Bayer and Merck do not complete a deal, previous bidders and other potential suitors would be free to reconsider the asset.
Merck spokesman Steve Cragle said in a telephone interview that he had no comment. Bayer spokesman Guenter Forneck also declined to comment.
When Merck, based in Whitehouse, New Jersey, first put the maker of Claritin allergy medicine and Coppertone sunblock up for sale, people familiar with the matter expected it to fetch about US$10 billion.
Other companies in the sector are reworking their businesses as well.
Last month, GlaxoSmithKline PLC sold its oncology portfolio to Novartis AG for US$14.5 billion. Novartis sold Glaxo its vaccines business for US$5.25 billion and sold its animal-health unit to Eli Lilly & Co for US$5.4 billion.
Merck shares rose 1.8 percent to US$59.62 at the close in New York on Thursday, their highest level since January 2008. Bayer, based in Leverkusen, Germany, did not trade on Thursday because of a holiday in Europe.
The company’s US American depositary shares gained less than 1 percent to US$139.66.
Bayer’s over-the-counter portfolio is anchored by the iconic analgesic aspirin. It is the third-biggest company in over-the-counter drugs by sales, behind Johnson & Johnson and Glaxo, according to a ranking compiled by Glaxo for the announcement of its deal with Novartis.