Merck said to be near closing deal with Bayer

Claritin and Coppertone sunscreen are two of the products sold by Merck's consumer unit

Merck, the big health care company, is close to a deal to sell its consumer unit to Bayer for about $14 billion, a person briefed on the matter said on Thursday.

A deal is expected to be announced in the coming days, before Merck holds an investor briefing in Boston on Tuesday.

Bayer is expected to pay cash and also swap some assets to complete the deal, which was a competitive process until recently. Reckitt Benckiser, the British health care giant, only recently backed out of the bidding. Sanofi, Procter & Gamble and Novartis were also previously interested in Merck's consumer unit.

Divesting itself of the unit, which includes popular products like the allergy medicine Claritin, Dr. Scholl's shoe inserts and Coppertone sunscreen, will allow Merck to focus on its specialty pharmaceuticals division. Merck is refocusing as it grapples with patent expirations that pushed quarterly revenue down 4 per cent in the first quarter, to $10.3 billion.

If Bayer contributes animal health assets, it would also allow Merck to build up its veterinary unit. In another move to reshape its portfolio, Merck last year offered to buy AZ Electronic Materials, a specialty chemical manufacturer, for £1.57 billion, or about $2.57 billion.

Bayer, the German drug maker best known for its aspirin, also makes Alka-Seltzer and Aleve, the pain reliever. Acquiring Merck's consumer unit would allow it to expand its focus on consumer products.

Shares in Merck, which has a market capitalisation of $175 billion, were up 2 percent on Thursday.

The talks were first reported by Bloomberg News and Reuters.

Merck's chief executive, Kenneth Frazier, telegraphed the deal in a conference call announcing first-quarter earnings earlier this week.

"We are divesting assets and making structural changes to increase our operating leverage," he said. "And we are also exploring strategic options for consumer and animal health."

A transaction between Merck and Bayer would be the latest deal to reshape the health care landscape. Last week, the Swiss drug maker Novartis and its British rival GlaxoSmithKline agreed to swap $20 billion in assets. Also last week, Valeant and William A. Ackman made an unusual hostile bid for Allergan for about $50 billion. And in a third big deal last week, Zimmer agreed to buy Biomet for $13 billion.

Then on Monday, Pfizer expressed its interest in acquiring AstraZeneca, the British drug maker, in a $99-billion deal that would allow Pfizer to reincorporate in England.

Even before Pfizer announced its interest in a deal, the flurry of deals made this the fastest start to a year for health care deal-making ever.

©2014 The New York Times News Service