Merck & Co sells consumer unit to Bayer for $14 billion

[May 06, 2014]  (Reuters) — Merck & Co Inc has agreed to sell its consumer care business to Germany's Bayer AG for $14.2 billion, the companies said on Tuesday, adding to a string of major cross-border healthcare deals.

"This acquisition marks a major milestone on our path towards global leadership in the attractive non-prescription medicines business," Bayer's chief executive Marijn Dekkers said in a statement.

Merck said it expects after-tax proceeds of between $8 billion and $9 billion from the sale, which is expected to close in the second half of 2014.

The transaction, the largest in the German healthcare industry since Bayer bought rival Schering in 2006, will make Bayer the second biggest over-the-counter drugs maker after Johnson & Johnson.

Bayer, the inventor of aspirin and maker of Bepanthen skin care products and Canesten antifungal creams, has repeatedly said it wants to overtake J&J in the rankings.

Reckitt Benckiser Group, one of the final contenders in the auction, said on April 30 it was no longer in active talks to buy the Merck business, leaving Bayer in pole position to win the business.

J&J commands about 4 percent of the consumer health market - worth nearly $200 billion at the retail level - followed by Bayer and GlaxoSmithKline (GSK) .

Merck & Co has around 1 percent with brands including Coppertone sunscreen and Claritin allergy medicine.

The fractured industry is consolidating fast. Novartis and GSK will form a joint venture in consumer healthcare as part of their agreement last month to trade more than $20 billion worth of assets.

Reuters first reported last month that Bayer and Reckitt had emerged as frontrunners in the auction with each offering roughly $13.5 billion, a price that could come close to $14 billion if the deal was finalized.

(Reporting by Ludwig Burger in Frankfurt and Esha Dey in Bangalore; Editing by Sriraj Kalluvila and Greg Mahlich)

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