Procter & Gamble Co (NYSE:PG) Reveals Plan To Purchase Merck Kgaa’s Consumer Health Unit

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The stock of Procter & Gamble Co (NYSE:PG) closed at $74.95 losing 4.18% in yesterday’s trading session. This company has made a statement revealing its plan to move ahead and spend $4.2 billion in the purchase of Merck KGaA’s consumer health unit. This will in turn lead to a greater exposure to Asian and Latin American markets as well as serve it with several vitamin brands. The seven seas will be one of them.

The maker of Gillette razors and Pampers diapers stated that the deal would help it a huge deal in terms of expanding its portfolio of consumer healthcare products. To be more specific, the Vicks cold relief is one of the several products available. The Merck unit comprises of the Neuroboin and Femibon vitamin brands.

Pfizer Inc. (NYSE:PFE) has been going through challenges and in that particular line, it is crucial to mention its struggle to divest the business for an amount totaling to about $20 billion. It was in January that Johnson & Johnson stepped away and the previous month witnessed Reckitt Benckiser drop out.

Prescription-free remedies are associated with stable sales and that is in a major way attributed to customers’ brand loyalty and that is at relatively lower margins as compared to what happens with the pharmaceuticals.

The cheaper store-brand products and intense price competition online, especially emanating from Amazon has weighed on profits in the Western markets as well as in the U.S.

The buying price for Merck’s business tells much regarding the way the German company moved down from price demands of about 4 billion Euros and that ended up deterring several initial suitors including Cinven, Perrigo and Stada owners Bain and Nestle.

Vincent Meunier, who happens to be an analyst following closely on the latest developments, has moved ahead to state that the price implied a valuation of almost 4.7 times sales. He added that it was about 19 times operating profit (EBITDA) for the business at the top end of the latest deals in the sector. According to him, that would help (Merck) focus on refurbishing its pipeline and its pharma unit as well.

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Matthew started his career as a trainee solicitor with a big four firm in New York before pivoting to try his hand in the equities game. He has since amassed a wealth of experience in the space with a focus on technology and innovation, particularly at the crossover between finance and the internet. He's currently interested in the way that blockchain technology is going to revolutionize finance and is focusing his attention towards identifying potential leaders in the space.

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