P&G will buy Merck over-the-counter OTC (OTC) dietary supplement brands such as Femibion women's health supplements, Seven Seas omega-3 fish oil, and Bion 3 immune-health supplements.
Thursday, P&G said the two companies had inked a pact that will send Merck's portfolio from Germany to Cincinnati, Ohio, for €3.4 billion ($4.21 billion).
But the deal does not yet include Merck's French consumer health business, although P&G has made a binding offer for this. It generated $1 billion in sales past year. "This will allow P&G to take advantage of changing consumer trends around healthy living that are driving interest in vitamins and dietary supplements and will give them a competitive boost in diversifying away from a pure OTC portfolio".
The deal will "complement" brands such as Vicks, Metamucil, Pepto-Bismol, Crest and Oral-B, P&G says in a release announcing the deal.
Merck said that this would permit it to reduce its debt on a much faster rate, giving its businesses which includes pharmaceuticals, chemicals and lab equipment much more flexibility although it ruled out procurements above five hundred million euros this year. The acquisition, expected to close in the next 14 months, will bring to P&G vitamin brands and over-the-counter remedies for muscle, joint and back pain that are now sold in 44 countries.
"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".
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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".
Merck had earned €911m from the consumer health business in 2017.
"For the Indian business, it has been agreed that P&G will acquire Merck's majority shareholding in Merck Ltd (India), a publicly traded company, and subsequently make a mandatory tender offer to minority shareholders", it said.
"This acquisition helps us continue to drive sales and profit growth for P&G by providing the capabilities and portfolio scale we need to operate a winning global OTC business on our own, without the aid of a health care partner".
Merck's consumer health brands grew 6 percent in the last two years, more than triple the growth P&G has achieved company-wide in recent years.