Glaxo’s bid in focus as Reckitt pulls out

British consumer goods group Reckitt Benckiser has pulled out of talks to buy Pfizer’s consumer health care business, strengthening rival bidder GlaxoSmithKline’s hand.

Reckitt dropped out yesterday as the US drug company was fielding binding offers for the unit. Sources familiar with the matter said British drugmaker GSK was working on an offer.

Reckitt said its proposal had only been for part of the Pfizer business, without giving further details. One person familiar with the matter said the company had been most interested in the painkiller Advil.

It is possible Pfizer may receive more offers, the sources added, or it could decide against a sale. Limited demand could ease the pressure on GSK to pay top-dollar or might allow it to coax the Pfizer unit into a joint venture it has with Novartis, instead of an outright sale, some investors said, although this would be complex.

Pfizer has been hoping to fetch as much as $20 billion for its consumer health business, which includes familiar over-the-counter brands such as Advil, Centrum multivitamins and Chapstick lip balm, according to the sources. Shares in Reckitt jumped more than 5 per cent yesterday on relief it would not be over-leveraging or making a dilutive rights issue to fund a deal, while GSK slipped 1 per cent.

But the decision is a blow for Chief Executive Rakesh Kapoor, who has long coveted the Pfizer operation as a means to bolster Reckitt’s position in consumer health (CH). “If indeed RB has opened the door for Pfizer CH to be acquired by GSK, it might end up significantly strengthening one of its main CH competitors,” said Bernstein analyst Andrew Wood.