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Pfizer running out of options for consumer business

Published on 04/04/18 at 09:02am

A surprise new name was thrown into the ring to take on Pfizer’s healthcare unit but speculation suggests that valuation is once again the sticking point, indicating that Pfizer may not be able to find anyone willing to acquire the unit this time around.

Procter & Gamble were the latest to be added to the list of suitors for the unit, and appeared as a surprise mainly because the bidding process had been deemed to be over.

However, as with other candidates, it seems that valuation of the unit is too far away; reports suggest that P&G would only be looking to put down $15 billion to acquire the business, with Pfizer thought to be holding out for closer to $20 billion.

In terms of selling the unit, it looks like this may be last chance saloon for Pfizer on this occasion, with each likely candidate taking a look at Pfizer’s offering before backing away.

Reckitt Benckiser was the first to officially state that it had been in discussions with Pfizer, but was only prepared to take on part of Pfizer’s business, which saw the discussions collapse.

The big name, and the one deemed most likely to make a move, was GSK but it seemed price got in the way of any deal, as Walmsley concluded on the failure of discussions that any deal could “not compromise our priorities for capital allocation”.

GSK then went onto buyout its partner, Novartis, in its joint venture consumer health unit – a move widely welcomed by investors.

It is reported that Pfizer may be assessing other options for the business that will not meant the last few months of tendering offers has been fruitless; it is thought to be assessing whether a joint venture may be the way forward for the unit, similar to the now concluded GSK-Novartis partnership.

The company has revealed it will make its decision by the end of the month, concluding a protracted attempt at a sell-off that now seems unlikely.

Ben Hargreaves

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