The consumer health unit of Merck includes well-known vitamin products such as Neurobion and Femibion. For the full year 2017, net sales of the Consumer Health business amounted to Euro 911 million (USD$1.1 billion).
The selloff agreement wraps up a sale process the Darmstadt-based drugmaker embarked on last September, pointing to "increasing internal constraints to fund" its consumer health business. The current three companies in India that represent P&G are Procter & Gamble Hygiene And Health Care (PGHH), in which the promoter group holds about 70%, Procter & Gamble Home Products (PGHP), a wholly owned subsidiary, and Gillette India, in which it has 75% shareholding.
As part of the deal, P&G will buy a majority stake in the German company's Indian consumer health business, Merck Ltd, and subsequently make a mandatory tender offer to minority shareholders. As such, the acquisition will help P&G improve its over the counter (OTC) geographic scale, category footprint and brand portfolio.
These brands provide solutions in relieving muscle, joint and back pain, colds and headaches, as well as supporting physical activity and mobility, many of which are treatment areas not now in P&G's portfolio.
Market researcher Euromonitor notes that, in 2017, P&G was the ninth largest global consumer health corporation in terms of retail value.
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"These leading brands and the great employees of the consumer health business of Merck KGaA, Darmstadt, Germany, will complement our personal health care business very well", said Tom Finn, president, P&G Global personal health care.
The transaction, which is expected to close by the end of the fourth quarter 2018, is subject to regulatory approvals and other customary closing conditions.
The companies announced the transaction on Thursday morning.
Merck said the divestment of its consumer health business did not change its goal of keeping net sales of its established prescription drugs, such as Erbitux against cancer and multiple sclerosis treatment Rebif, organically stable until 2022.
The deal does not yet include Merck's French consumer health business, for which P&G has made a binding offer, Merck said. The consumer health market has witnessed action recently with Novartis divesting part of its holdings for $13 billion to GlaxoSmithKline, amounting to 3.6 times its revenue.