Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Classified Sites

The Canadian Press - ONLINE EDITION

Germany's Bayer plans to buy Merck & Co.'s consumer care business for $14.2 billion

In this photo taken July 6, 2009 worker Roland Ulbrich presents an Aspirin pill made for Italy at the pharmaceutical plant of the Bayer Bitterfeld company in Bitterfeld-Wolfen, eastern Germany. Germany's Bayer AG says it plans to buy U.S. pharmaceutical company Merck & Co. Inc.'s consumer care business, whose products include the Coppertone suncare range, Claritin allergy medicine and the Dr. Scholl's footcare products, for US$ 14.2 billion. (AP Photo/Eckehard Schulz)

Enlarge Image

In this photo taken July 6, 2009 worker Roland Ulbrich presents an Aspirin pill made for Italy at the pharmaceutical plant of the Bayer Bitterfeld company in Bitterfeld-Wolfen, eastern Germany. Germany's Bayer AG says it plans to buy U.S. pharmaceutical company Merck & Co. Inc.'s consumer care business, whose products include the Coppertone suncare range, Claritin allergy medicine and the Dr. Scholl's footcare products, for US$ 14.2 billion. (AP Photo/Eckehard Schulz)

TRENTON, N.J. - Germany's Bayer plans to buy U.S.-based Merck & Co.'s consumer health business, creating a combined medicine cabinet of household names from Bayer's aspirin to Merck's Claritin allergy pills.

The $14.2 billion deal announced Tuesday would vault Bayer AG atop the nonprescription medicine business across North and Latin America. It would make Bayer No. 1 worldwide in skin and gastrointestinal products, a strong No. 2 in the huge cold and allergy category, and No. 3 in pain relievers.

"We are combining two highly complementary businesses with virtually no overlap that will improve our product position over multiple categories," Marijn Dekkers, Bayer's CEO, said on a conference call with journalists.

Merck, widely considered the most research-driven U.S. pharmaceutical company, would divest a slow-growing business it inherited in 2009 when it bought Schering-Plough Corp. to get its experimental prescription medicines.

Bayer, which invented aspirin more than a century ago, already has a major over-the-counter division whose brands include Aleve pain reliever, Alka-Seltzer and One-A-Day vitamins. It would add Merck's Claritin, the Coppertone sun-care line, Dr. Scholl's foot-care products and MiraLAX laxative.

The transaction is part of a recent surge in pharmaceutical industry deals. Some drugmakers are selling or swapping business segments to focus on areas where they have the most expertise, marketing prowess and prospects for growth, as Merck is doing. Others, like Bayer, are making acquisitions to beef up their portfolios of products or experimental drugs to boost future sales.

Merck CEO Kenneth Frazier said in January that he was evaluating options for Merck's consumer and animal health businesses, both units without enough scale to grow quickly. On Tuesday, Merck said it would use the sale proceeds to invest in business areas with the highest growth potential and beef up its drug pipeline with "external assets."

Merck is a different company than Merck KgaA, which is based in Darmstadt, Germany. The American company is known as MSD, for Merck, Sharp & Dohme, outside the U.S. and Canada.

The transaction, expected to close in the second half of 2014, requires regulatory approval. Bayer will borrow money to pay for the deal, which will bring it significant tax savings and about $200 million in savings on marketing and production costs by 2017.

"The extra revenue creates the synergies for us," Dekkers said, adding that the deal "marks a major milestone on our path towards global leadership in the attractive non-prescription medicines business."

Ana Nicholls, a health care analyst at The Economist Intelligence Unit, noted Bayer has offset price-cutting and recession in Europe with a big push into emerging markets.

"It now has a geographical reach that should allow it to take its newly acquired U.S. brands, such as Claritin and Coppertone, and roll them out pretty much worldwide," she added.

Meanwhile, Bayer and Merck also agreed to co-operate on developing and selling drugs in a new class known as sGC modulators, which have potential for treating some heart conditions — long a Merck strength. Merck would initially pay Bayer $1 billion, with up to $1.1 billion in future payments contingent on sales.

The partnership includes a Bayer drug approved in the U.S., Adempas for treating high blood pressure in lung blood vessels. It also features a chronic heart failure drug in midstage patient testing and other experimental drugs in earlier stages of research.

Merck, like other major drugmakers, has seen prescription drug sales slide amid cheap generic competition for several drugs that once raked in billions annually. Those include asthma and allergy pill Singulair, allergy spray Nasonex and blood pressure drugs Cozaar and Hyzaar.

Merck, based in Whitehouse Station, New Jersey, in April reported a 7 per cent rise in first-quarter earnings, mainly due to cost cutting across its businesses, including eliminating another 2,000 jobs in the quarter.

In late afternoon trading, Merck shares were down $1.39, or 2.4 per cent, at $57.24 in New York. Bayer shares fell nearly 1 per cent in Germany.

Dekkers said any layoffs after the deal closes, either in the U.S. or Germany, would not be significant.

"This is not a deal that hinges on job eliminations as a key value driver," he said.

Bayer, based in Leverkusen, Germany, said the combined consumer care business would be based at its new U.S. health care headquarters in Whippany, New Jersey.

Merck's consumer business, based nearby in Summit, New Jersey, has about 2,250 employees. Bayer's consumer business, nearly 2 1/2 times the size of Merck's, has about 8,000 employees.

___

AP reporters David McHugh in Frankfurt, Geir Moulson in Berlin and Tom Murphy in Indianapolis contributed to this story.

___

Follow Linda A. Johnson at www.twitter.com/LindaJ_onPharma

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Brandon Sun Business Directory
Sudden Surge: Flood of 2014
Opportunity Magazine — The Bakken
Why Not Minot?
Welcome to Winnipeg

Social Media