Bayer to Keep Acquired Non-drug Merck Brands
Bayer HealthCare said it plans to keep consumer brands such as Dr. Scholl's and Coppertone it picked up in its $14 billion buy of US Merck's non-prescription drugs business in May.
This is despite reports that other companies are keen to grab the assets. Citing sources, the news agency Reuters said Bayer is being courted by rivals keen to acquire the foot care and sunscreen brands.
After winning the Merck prize over stiff competition, Bayer said its aim was to become global leader in over-the-counter (OTC) medicines. Some financial analysts are questioning the rationale for Bayer keeping all of the businesses, however.
Offloading Dr. Scholl's foot care and Coppertone, which account for 27% of the Merck bundle's combined annual sales, would allow Bayer to focus on Merck's core healthcare products such as allergy remedy Claritin and MiraLAX laxative and give it the resources to make the most of those brands, one analyst told Reuters.
Reckitt Benckiser, which owns the Scholl foot care brand outside the United States, as well as Beiersdorf and L'Oreal were seen as potential acquirers of the assets.
One source said Coppertone and Dr. Scholl's, with $275 million and $309 million in 2013 sales, respectively, together could be worth as much as $4 billion on the basis of the sales multiple of about 6.5 that Bayer paid for the entire Merck consumer bundle.
Others said that Dr. Scholl's was more likely to fetch $1 billion to $1.5 billion, and Coppertone about $1 billion, because personal care products change hands for lower multiples than the medicines in the package.
