After a flurry of anticipation that GlaxoSmithKline was about to make a play for Pfizer’s consumer healthcare business, the company has pulled out of the bidding.
The decision not to go ahead comes days after Reckitt Benckiser also confirmed it would not be making an offer, removing two of the main contenders for a business that Pfizer has had under strategic review since last year.
GSK was widely rumoured to be gearing up for a $15bn-20bn offer on the unit, but in a short statement released this morning chief executive Emma Walmsley said: “While we will continue to review opportunities that may accelerate our strategy, they must meet our criteria for returns and not compromise our priorities for capital allocation.”
Pfizer confirmed it was considering a sale of its consumer healthcare assets, which include big brands such as painkiller Advil (ibuprofen), multivitamin Centrum and ChapStick lipcare products, last October.
Yesterday, Reckitt CEO Rakesh Kapoor said that it was pulling out as it wanted to make an offer only for part of the business – rumoured to be the Advil franchise – but was unable to reach agreement on that with Pfizer. He noted the company is still in the throes of the $17bn acquisition of Mead Johnson’s infant nutrition business, adding that “we always approach inorganic growth opportunities in a rigorous, disciplined, and financially responsible manner.”
“An acquisition for the whole Pfizer consumer health business did not fit our acquisition criteria and an acquisition of part of the business was not possible,” he added.
Other companies linked to a possible purchase in the past include Procter & Gamble, Johnson & Johnson and Abbott, as well as food group Nestle, but Pfizer’s deadline for bids came to an end yesterday with no news of a firm suitor.
The company said in the wake of Reckitt Benckiser’s withdrawal that it was continuing to look at “strategic alternatives” for the unit and expects to make a decision before the end of the year.
The consumer health is fragmented and growing thanks to an ageing and more health-conscious population in mature markets, but increasing competition from store-brand rivals is proving challenging for big-name brands. This may be dampening the confidence – and bidding offers – of potential acquirers.
Pfizer isn’t the first to have trouble finding a buyer; last month Nestle opted not to press ahead with a €4bn purchase of Merck KGaA’s consumer health unit, with speculation at the time that it might be because of a disagreement on the value of the business, or that Nestle was switching its attention to Pfizer’s unit.