German pharmaceuticals, chemicals and laboratory products group Merck completed the sale of its Consumer Health business to US consumer products group Procter & Gamble (P&G) on Dec. 1. Belén Garijo, CEO Healthcare, called the transaction – which she said was completed within an ambitious timeframe – “an important milestone for both Merck and Consumer Health.”

The asset transfer for € 3.4 billion in cash, which was executed through the sale of Merck’s shares in a number of legal entities as well as various asset sales, follows consultations with employee representatives, approval of all relevant regulatory authorities and the fulfilment of other customary closing conditions. The European Commission gave its green light at the end of August.

Some 3,300 employees, mainly from consumer health, have transferred to P&G. As part of the transaction, Merck and P&G have agreed to a number of manufacturing, supply, and service agreements.

The German group’s consumer health business operates in 44 countries and manufactures more than 900 products. It has two consumer health-managed production sites at Spittal, Austria, and Goa, India.

With the purchase, P&G will be able to add Merck’s vitamin and food supplements, such as Seven Seas, to its portfolio and also boost its presence in Latin America and Asia. The US group manufactures a range of over-the-counter medicines such as Vicks cough and cold products, along with well-known brands such as Pampers diapers and Gillette razors.

After deducting taxes and transaction-related effects, Merck plans to use the net cash proceeds of about € 2.7 billion primarily to further reduce its financial debt. With the sale, the company has now hit its 2018 leverage target of a net debt to EBITDA pre-ratio of less than 2, said chief financial officer Marcus Kuhnert, who added that shedding Consumer Health will increase Merck’s flexibility to focus on innovation-driven businesses within three business sectors.