Pfizer auction dominated by Europeans - sources
Fri May 12, 2006 12:28 AM BST
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NEW YORK, May 11 (Reuters) - Final bidding for Pfizer Inc.'s (PFE.N: Quote, Profile, Research) consumer products business is expected to be dominated by European drug and consumer products companies, with Colgate-Palmolive Co. seen cooling on the $13-$14 billion auction, sources familiar with the situation said on Thursday.
Final offers for Pfizer's consumer business, whose products include Listerine mouthwash, Visine eye drops, and Rolaids antacid, are due by the end of May, sources said. Pfizer, however, may continue negotiations with a smaller pool of suitors beyond that date, sources said.
The unit, which had sales of $3.9 billion last year, drew preliminary bids in March from GlaxoSmithKline Plc (GSK.L: Quote, Profile, Research), Novartis AG (NOVN.VX: Quote, Profile, Research), Reckitt Benckiser Plc (RB.L: Quote, Profile, Research) and Colgate, sources said. The companies have declined to comment.
The names of other bidders were not immediately available.
Pfizer has weighed spinning off the unit to shareholders in a tax-free transaction, or selling it, which would trigger a hefty tax bill.
The prices being discussed with suitors, however, have been in the $13 billion to $14 billion range, which would be high enough to offset the pain of a tax bill, sources said. That makes a sale, rather than a spinoff more likely, they said.
Although Colgate (CL.N: Quote, Profile, Research) has said Listerine would fit well in its oral care business and it may eye other parts of Pfizer's business, its interest in the auction has cooled, one source said.
Pfizer has said it has no interest in selling the unit piecemeal, making it unlikely Colgate (CL.N: Quote, Profile, Research) would participate in the final round of bidding, the source said. Continued...
"The problem with this deal is the scale of it. Taking all the products is quite difficult for one company because of antitrust issues, but a sale as a package is what Pfizer wants," said one source who declined to be identified by name.
Although its strategy may change, Colgate Chairman and Chief Executive Reuben Mark said in February that the company's overall plan was to grow internally, not through acquisitions.
Colgate, which is in the midst of a restructuring to cut 12 percent of its work force and close one-third of its factories, could not be immediately reached on Thursday for comment.
Analysts said other companies such as Johnson & Johnson (JNJ.N: Quote, Profile, Research), Procter & Gamble Co. (PG.N: Quote, Profile, Research), Bayer AG (BAYG.DE: Quote, Profile, Research) and Unilever NV (UNc.AS: Quote, Profile, Research) also could vie for the business. The companies could not be immediately reached for comment.
Glaxo and Bayer AG (BAYG.DE: Quote, Profile, Research) officials previously said they may be interested in the business, but Bayer has since agreed to buy German rival Schering (SCHG.DE: Quote, Profile, Research) for roughly $20 billion.
Colgate and other consumer products companies may benefit in the long-term, however, if the winner bidder eventually sheds unwanted brands, analysts said. Yet, even if a winner suitor sells off some brands, Colgate is unlikely to nab Listerine, sources said.
"Listerine is the crown jewel. You don't go through the expense and cost of buying the business and then shed the best part," a source said. (Additional reporting by Ben Hirschler in London)
Link: today.reuters.co.uk |
