P&G to buy Merck unit for $4.2B

bengaluru — Procter & Gamble Co (P&G) has agreed to acquire Merck KGaA’s consumer health unit for €3.4 billion ($4.2 billion), giving it vitamin brands such as Seven Seas and greater exposure to Latin American and Asian markets.

The maker of Pampers diapers and Gillette razors said the deal would help it expand its portfolio of consumer healthcare products which includes Vicks cold relief. The Merck unit includes vitamin brands Femibion and Neurobion.

The deal follows GlaxoSmithKline agreeing to buy Novartis out of their consumer healthcare joint venture for $13 billion after dropping its pursuit of Pfizer’s consumer unit.

Pfizer has struggled to divest the business for as much as $20 billion, after Reckitt Benckiser dropped out last month and Johnson & Johnson stepped away in January. Prescription-free remedies offer stable sales due to customers’ brand loyalty, albeit at lower margins than pharmaceuticals.

But intense price competition online, mainly from Amazon , as well as cheaper store-brand products have weighed on profits in the US and other Western markets. US-based P&G derived 12 per cent of group sales, or $7.5 billion, from health care products last year, including Oral-B toothbrushes and toothpastes. The purchase price for Merck’s business suggests that the German company climbed down from price demands of as much as €4 billion. — Reuters