Merck consumer health sale ‘at risk’ after Nestlé pull out

By Nathan Gray contact

- Last updated on GMT

Related tags: Health

The sale of Merck KGaA’s consumer health unit is at risk after leading bidder Nestlé left the race for the business, sources have suggested.

Swiss-based food and nutrition giant Nestlé is said to have walked away from the process to buy Merck’s consumer health unit after months of negotiations led to an impasse with regard to purchase price, according to reports in Reuters​.

Deal background

In September last year, Merck confirmed that it was exploring options for its consumer health business, with options including a either full or partial sale.

“We expect increasing internal constraints to fund the business to reach the required scale. Fully anticipating this, we are preparing strategic options,” ​Belén Garijo, head of Merck’s healthcare business, said in a statement.

“Any possible proceeds from a potential transaction would be used to deliver on the company’s overall financial targets,”​ she said.

Nestlé, meanwhile, has long-held ambitions in consumer health – and has move distinctly in the direction of nutrition and healthcare in recent years. Nestlé CEO Mark Shneider has a wealth of experience in the healthcare sector and has already signalled an intention for greater focus on nutrition, health and wellness.

Recent deals involving the company reflect this strategic shift, with the company recently selling its U.S. confectionery business to Ferrero for $2.8 billion​, and reportedly seeking a deal to buy Merck KGaA’s consumer health unit in a €4 billion deal​.

New developments

Merck is said to be expecting a price of around €4 billion from the divestment of its consumer health business, however interest in the deal appears to be waning as companies said to be interested in the deal have since been linked to the purchase of Pfizer’s consumer health group for around €20 billion.

Indeed, the news of Nestlé’s pull out comes just days after the reported deadline for bids to be submitted in the Pfizer deal – where the Nestlé have also been strongly linked with a buy-out.

Several sources have suggested that interest in the Merck deal has also dipped with rival UK-based consumer health firm Reckitt Benckiser as interest and competition in a deal for Pfizer’s consumer business gains momentum.

Related topics: Mergers and Acquisitions, Ingredients

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