Bayer shells out $14.2 billion for Merck & Co OTC business; firms to collaborate on sGC modulators

Confirming strong rumors over the past week or so, German pharma major Bayer (BAYN: DE) confirmed it has agreed to acquire the consumer care business of US drug giant Merck & Co (NYSE: MRK) for a purchase price of $14.2 billion (10.4 billion euros). Bayer’s shares dipped 0.8% to 99.21 euros by early afternoon trading today (May 6).

“This acquisition marks a major milestone on our path towards global leadership in the attractive non-prescription medicines business," explained Bayer chief executive Marijn Dekkers. “At the same time we are leveraging our capabilities in the cardiovascular therapeutic area,” he added, referring to a related transaction, whereby Bayer has entered into a global co-development and co-commercialization agreement with Merck in the field of soluble guanylate cyclase (sGC) modulators.

Significant enhancement of Bayer’s consumer care business

The acquisition will give Bayer the global number two position in non-prescription (over-the-counter, OTC) products following recently announced consolidations in this highly attractive and growing health care industry segment, and will significantly enhance Bayer’s business across multiple therapeutic categories and geographies. Merck consumer care business includes leading brands such as Claritin, Coppertone and Dr. Scholl’s. Pro forma sales of the combined businesses in 2013 amounted to $7.4 billion with Merck’s business contributing around $2.2 billion. “We are adding significant scope and earnings power to a business that is already delivering strong margins and stable cash flows,” added Dr Dekkers.