German pharmaceutical and chemical company Merck says it has agreed to sell its global consumer health business to Procter & Gamble for 3.4 billion euros ($4.2 billion) in cash.
The company said the transaction will be executed through the sale of its shares in a number of legal entities as well as various asset sales that comprises the consumer health business across 44 countries, including more than 900 products and two consumer health-managed production sites in Spittal (Austria) and Goa (India).
The sale of the global consumer health business, however, does not yet comprise its French consumer health business, where P&G has made a binding offer to acquire the shares and assets upon Merck having informed and consulted with the relevant works council representatives.
The deal will improve P&G's OTC geographic scale, brand portfolio and category footprint in the vast majority of the world's top 15 OTC markets, he said.
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The Merck portfolio "brings a strong set of brands, products and capabilities" to P&G, added Steve Bishop, group president for global health care, "and provides an attractive and complementary footprint to further fuel growth".
The purchase adds a portfolio of physician-supported brands to P&G brands such as Vicks, Metamucil, Pepto-Bismol, Crest and Oral-B.
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"The divestment of the consumer health business is an important step in Merck's strategic focus on innovation-driven businesses within healthcare, life science and performance materials".
The acquisition will replace P&G's healthcare joint venture with Teva Pharmaceuticals, which was formed in 2011 and will be terminated on July 1.
The Merck unit includes vitamin brands Femibion and Neurobion.
Almost around 3,300 Merck employees could then move to P&G once the transaction is completed, which is expected to happen by the fourth quarter.
Merck executive board chairman and CEO Stefan Oschmann said: "Consumer Health is a strong business that deserves the best possible opportunities for its future development".
As part of the transaction, it is contemplated that approximately 3,300 employees, mainly from consumer health, will transition to P&G upon completion of the transaction.
"First, it allows P&G to diversify its consumer health portfolio geographically, as Merck KGaA has well-built presence across Europe, Asia, and Latin America, whereas nearly half of P&G's consumer health sales fall just in the U.S. It also makes sense to expand P&G's portfolio from pure OTC towards the faster-growing vitamins and dietary supplements categories where Merck KGaA plays most directly; more than three-quarters of Merck's global sales come in the form of vitamins and dietary supplements, while more than 80% of P&G's consumer health sales fall in OTC".