Johnson & Johnson Quits Race To Acquire Pfizer’s Consumer Products Business

Reports indicate that consumer goods giant Johnson & Johnson is no longer in the running to acquire the consumer health business of Pfizer. This now leaves Reckitt Benckiser and GlaxoSmithKline among those still gunning to acquire the unit. The deadline for submitting bids for the Pfizer division which makes Chapstick lip balm, Centrum multivitamins and Advil painkiller is February 1, 2018.

According to sources Pfizer wants to dispose of the unit at a price of at least $20 billion. Initially Johnson & Johnson was viewed as the leading contender since the healthcare giant has shown intentions of broadening its portfolio. Additionally Johnson & Johnson has the financial resources required to make such an acquisition.

No longer in negotiations

“While we would normally not comment on market speculation or rumors, in this instance we refute assertions that we are in negotiation for Pfizer’s consumer business,” said media relations vice president oat Johnson & Johnson, Ernie Knewitz.

In the beginning the healthcare giant was being advised by Goldman Sachs on the deal. GlaxoSmithKline on the other hand has hired Citi and JPMorgan as its financial advisors. The financial advisor of Reckitt Benckiser is Bank of America.

Per the chief executive officer of Pfizer, Ian Read, selling the unit would allow the pharmaceutical giant to concentrate on prescription medicines. For rival pharmaceutical firm GlaxoSmithKline or consumer products group Reckitt Benckiser, acquiring the unit would be game-changing since it would turn either of them into one of the largest players in consumer health products in the world.

Consumer health products

The consumer health products sector is one that is increasingly becoming lucrative due to the fact that health-conscious consumers and ageing populations are driving demand for products used in self-medication. Despite the fact that over-the-counter remedies are low-margin goods compared to prescription medicines, they are typically household names and thus enjoy durability and loyalty among consumers.

The sale of Pfizer’s consumer products unit was initially mooted last year in October after the pharmaceutical giant disclosed that a strategic review of the unit would be undertaken. In 2016 the unit posted sales of around $3.4 billion. According to sources Pfizer is valuing the unit at over 20 times the core earnings. Organization of the prospective sale is being done by Morgan Stanley, Guggenheim Securities and Centerview Partners. Pfizer is aiming to have a deal clinched before summer this year and is confident that the interest already show is enough to kick off a competitive auction.

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