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Novartis Said to Weigh Animal-Health Asset Swap

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Novartis Headquarters Stand in Basel
Novartis has little use for additional cash and may choose to swap the veterinary unit for an asset that would bolster the company in an area in which it is already a leader, people with knowledge of the matter said. Photographer: Gianluca Colla/Bloomberg

Dec. 10 (Bloomberg) -- Novartis AG, which is exploring options for its animal-health business, is considering exchanging the division for one of Merck & Co.’s assets rather than selling it, people with knowledge of the matter said.

Trading the business to Merck or another company is one of several options that Basel, Switzerland-based Novartis is weighing, said the people, who asked not to be identified because the process is private. Novartis has little use for additional cash and may choose to swap the veterinary unit for an asset that would bolster the company in an area in which it is already a leader, the people said.

Merck’s over-the-counter drug business, which includes brands such as Coppertone sunblock and Claritin allergy relief medicine, is attractive to Novartis, the people said. It isn’t clear whether Merck would be open to such an exchange, the people said.

In addition to Whitehouse, N.J.-based Merck, the Swiss pharmaceutical giant’s animal-health unit has drawn interest from German drugmaker Boehringer Ingelheim GmbH, two people with knowledge of the matter said. Eli Lilly & Co. and Bayer AG also have expressed interest, people familiar have said.

Merck says its animal-health business is the second-biggest in the industry, with $3.40 billion in sales last year. Citigroup Inc. analysts valued the Novartis veterinary unit at about $4 billion including net debt in October. Novartis doesn’t publicly report separate financial results for the business.

Eric Althoff, a spokesman for Novartis, declined to comment. A representative for Merck didn’t respond to messages seeking comment. A spokesman for Boehringer Ingelheim declined to comment today.

Asset Review

Novartis is weighing a sale of several of its units, including over-the-counter medicines and the vaccines operation, people familiar with the company’s plans said last month. It hasn’t made a decision on its animal-health unit and hasn’t officially started taking bids, one of the people with knowledge of the current situation said.

The drugmaker wants its businesses to be among industry leaders or it will consider divesting them, Chief Executive Officer Joe Jimenez has said. The company hasn’t made any final decision on whether to divest any units, Chairman Joerg Reinhardt said at conference this month.

Novartis is working with Goldman Sachs Group Inc. to explore options for its animal-health business and the other units, people familiar with the company’s plans said in November.

To contact the reporters on this story: David Welch in New York at dwelch12@bloomberg.net; Matthew Campbell in London at mcampbell39@bloomberg.net; Albertina Torsoli in Geneva at atorsoli@bloomberg.net

To contact the editor responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net

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