Glaxo, Reckitt Are Said to Be Only Suitors for Pfizer's Division

  • Companies including Sanofi, J&J, Nestle have dropped out
  • Due diligence to start shortly, ahead of final offers

Photographer: Montana Pritchard/PGA of America

GlaxoSmithKline Plc and Reckitt Benckiser Group Plc are the only companies to have submitted non-binding bids for Pfizer Inc.’s consumer-health business after other potential suitors bowed out, according to people with knowledge of the matter.

Pfizer plans to open a data room for Glaxo and Reckitt to start due diligence on the assets before submitting final offers in the next few weeks, the people said, asking not to be identified because the matter is private. French drugmaker Sanofi, Switzerland’s Nestle SA and U.S. health care-giant Johnson & Johnson were among companies to consider and then decide against bidding for the business, the people said.

The deadline for non-binding offers for the business -- which includes popular brands such as the pain reliever Advil, ChapStick lip balm and the dietary supplement Centrum -- was Feb. 1, the people said. The unit could fetch $15 billion to $20 billion, people familiar with the matter have said. Potential buyers have expressed concerns about the division’s stagnant sales as well as the challenge from online competitors such as Inc., the people said.

Representatives for Glaxo, Reckitt, Sanofi and Nestle declined to comment. A spokesman for J&J confirmed that the company had withdrawn from the bidding process and declined to comment further.

Stocks Drop

Shares of Glaxo fell 1.3 percent to 12.93 British pounds as of 8:55 a.m. in London, extending its rout in the past year to 15.3 percent. Reckitt declined 1.6 percent to 66.07 pounds.

Pfizer is continuing to evaluate a range of options for its consumer health-care business, including a full or partial separation through a spinoff, sale or other transaction, and it may still opt to keep the business, a spokeswoman said. The New York-based drugmaker expects to reach a decision in 2018, she said. Its stock closed down 0.6 percent at $36.61 on Friday.

Pfizer first announced a review of the business in October. A sale would help it raise billions of dollars in cash for acquisitions and streamline operations to focus on other growth areas. Sales at the consumer-products business were little changed in the fourth quarter from a year earlier at $950 million. Full-year sales at the unit advanced by 2 percent to $3.47 billion.

Glaxo Chief Executive Officer Emma Walmsley said at a conference in San Francisco last month that the company’s top priority is the pharmaceuticals business and that it doesn’t need the Pfizer assets, though the business would be complementary to its own. Facing pressure to rejuvenate her company’s medicine pipeline and make the division more competitive, Walmsley has replaced about 50 of 125 top managers, aiming to bring in new ideas and skills.

Reckitt Chief Executive Officer Rakesh Kapoor last year split the Slough, England-based company into autonomous divisions for home-care and health products, taking the helm of the latter unit himself. That move triggered speculation that he was laying the groundwork for a broader strategic shift, or even a sale of the household business. The CEO has faced increasing pressure to rejuvenate the businesses following a slump in sales at the newly acquired baby-formula business Mead Johnson.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE