Germany's Bayer is to buy the consumer care business of US pharmaceutical company Merck & Co for US$14.2bn (€10.4bn).
'This acquisition marks a major milestone on our path towards global leadership in the attractive non-prescription medicines business,' said Bayer's CEO Marijn Dekkers.
Merck & Co's consumer care business includes leading brands such as Claritin, Coppertone and Dr Scholl's. Pro forma sales of the combined businesses in 2013 amounted to $7.4bn, with Merck & Co contributing approximately $2.2bn. Around 70% of its sales are in the US, primarily in the cold, allergy, sinus & flu, dermatology (including sun care), foot health and gastrointestinal categories.
After completion, Bayer is expected to achieve global leadership positions in dermatology and gastrointestinals, two of the five most important non-prescription healthcare product categories, and advance to the number two position in the cold, allergy, sinus and flu category. The company will remain number two in nutritionals and number three in analgesics.
The purchase price includes a payment associated with sales of allergy treatment Claritin and cold remedy Afrin in certain countries where these products are still prescription-only.
The acquisition marks a major milestone on our path towards global leadership in the non-prescription medicines business
In a related agreement, the two companies will cooperate in the cardiovascular field of soluble guanylate cyclase (sGC) modulators.
This collaboration includes Adempas (riociguat), which is already approved for the treatment of pulmonary hypertension and is being developed in additional indications, as well as vericiguat, an investigational compound that is currently being developed in two Phase IIb studies in worsening chronic heart failure.
The companies have also agreed that sGC modulators currently in earlier stages of research and development may be included in the collaboration.
Merck & Co will make payments of up to $2.1bn to Bayer, comprising an up-front payment of $1bn, and additional sales milestone payments of $1.1bn related to future collective sales of certain collaboration compounds.
Bayer and Merck & Co will equally share costs and profits from the sGC modulators and implement a joint development and commercialisation strategy.
Bayer will lead the commercialisation for Adempas in the Americas, while Merck & Co will lead the commercialisation outside these regions.
For vericiguat and other potential investigational sGC modulators, Bayer will lead commercialisation outside the Americas, while Merck & Co will lead commercialisation in these regions. Both companies will have the option to co-promote Adempas and the follow-on sGC modulators in each others' territories.
Bayer expects the integration of the businesses to generate cost synergies, for example in marketing spend and cost of goods, in the region of $200m a year by 2017.
The deal is subject to approval from the relevant antitrust authorities, with closing expected in the second half of this year.
Merck & Co's consumer care business has approximately 2,250 employees and is headquartered in New Jersey (US). Production is located in the US, Canada and China.
The merged business will be headquartered at the Bayer site in Whippany, New Jersey.