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Reckitt Benckiser Says It’s Among Bidders For Merck Consumer Arm

Reckitt Benckiser Group Plc, the maker of Durex condoms, said it’s among bidders for Merck & Co.’s consumer unit, a deal that would add Claritin allergy medicine and Coppertone sunblock to its growing stable of over-the-counter remedies. 

“We understand that we are part of a competitive process,” the Slough, England-based company said today in a statement. “There is absolutely no certainty as to the outcome or timing of this process.”

Reckitt is among bidders including Procter & Gamble Co. and Bayer AG for the business, people familiar with the matter have said. Representatives for Bayer, P&G and Merck declined to comment earlier on the matter.

Acquiring the Merck unit would make Reckitt Benckiser the third-biggest global seller of consumer-health products, up from number nine currently. Since taking over from Bart Becht in 2011, Chief Executive Officer Rakesh Kapoor has grown Reckitt Benckiser’s consumer-health division through acquisitions to offset slowing growth at its household-cleaning unit.

The health segment accounts for about 30% of the company’s £10 billion ($16.8 billion) in revenue, up from 5% in 2005, and adding the Merck brands would increase that to about 37%. Reckitt Benckiser, which sells a drug to help people quit heroin use, would also be paying for earnings growth after putting its pharmaceuticals business under review.

The Merck unit reported $1.9 billion in sales last year, down 3% from 2012 after the termination of some distribution agreements in China. Merck decided to put that business and its animal-health unit under review last year in order to allocate more capital to new drugs like its immune system-based cancer medicine, CEO Ken Frazier has said.

Bloomberg

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