Bayer Closes Acquisition of Consumer Care Business of Merck & Co., Inc., for $14.2 Billion

Bayer has completed the acquisition of the consumer care business of the U.S. pharmaceuticals group Merck & Co., Inc., Whitehouse Station, NJ. The transaction closed on Oct. 1, 2014, following receipt of required antitrust approvals.

“This acquisition is a milestone for Bayer and we intend to continue the expansion of our attractive over-the-counter business both through organic growth and bolt-on acquisitions,” said Bayer CEO Dr. Marijn Dekkers. Bayer paid a purchase price of $14.2 billion, less certain contingent amounts held back that will be payable upon antitrust approvals in Mexico and the Republic of Korea. Integration of the acquired business has been successfully initiated. The combined consumer care business is headed by Erica Mann, member of the Bayer HealthCare Executive Committee and responsible for the Consumer Care division.

The acquisition significantly enhances Bayer’s over-the-counter (OTC) business across multiple therapeutic categories and geographies. Pro forma sales of the combined businesses in 2013 amounted to $7.4 billion (€5.5 billion), with Merck & Co., Inc.’s business contributing approximately €2.2 billion. The acquisition will give Bayer the global number two position in non-prescription medication – behind the combined OTC businesses of Novartis and GlaxoSmithKline, following the completion of their announced joint venture in 2015, and ahead of the world’s previous industry leader Johnson & Johnson.

Within a highly diverse industry, Bayer is now the OTC leader in North and Latin America and the leader in dermatology and gastrointestinal treatments, two of the five most important non-prescription health care product categories. The company has advanced to the number two position in the cold, allergy, sinus and flu category and remains the number two in nutritionals and number three in analgesics.

The consumer care business acquired from Merck & Co., Inc. is primarily comprised of products in the cold, allergy, sinus & flu; dermatology (including sun care); foot health; and gastrointestinal categories. The most important brands are Claritin (allergy), Coppertone (sun care), MiraLAX (gastrointestinals), Afrin (cold) and – in North and Latin America – Dr. Scholl’s (foot care). These brands complement Bayer’s existing OTC portfolio, which includes brands such as Aspirin and Aleve in the analgesics category, dermatology products including Canesten and Bepanthen/Bepanthol, nutritional brands such as Supradyn, One A Day, Berocca, Elevit and Redoxon, antacids such as Rennie™ and Talcid, and cough-and-cold products such as Alka-Seltzer Plus and White & Black.

Approximately 2,000 employees from Merck & Co., Inc. and 8,800 from Bayer will be brought together under one roof in Bayer’s new consumer care business.

“Our goal is to combine the best people and capabilities of both organizations,” said Mann. The management team of the merged businesses will be located at existing Bayer sites in Whippany, NJ, USA; Basel, Switzerland; Shanghai, China; Leverkusen, Germany; and Singapore.

The strategic pharma collaboration between Bayer and Merck & Co., Inc. in the field of soluble guanylate cyclase (sGC) modulators also comes into effect simultaneously. Bayer plans to strengthen its development options in the cardiology business with the global co-development and co-commercialization agreement, which has already been approved by the relevant antitrust authorities. Merck & Co., Inc. will make payments of up to €2.1 billion to Bayer. These include an up-front payment of €1 billion, which is to be paid shortly after completion as well as revenue-based milestone payments of up to €1.1 billion for future combined sales of certain jointly developed substances, including the pulmonary hypertension treatment Adempas (riociguat).