J&J Out Of Race For Pfizer Inc. (NYSE:PFE)’s $20 Billion Consumer Unit As Deadline Looms

Johnson & Johnson has withdrawn from the race to acquire Pfizer Inc. (NYSE:PFE)‘s consumer health business. This leaves Reckitt Benckiser and GlaxoSmithKline among those preparing bids. This is according to sources privy to the matter.

The deadline for submitting offers for the unit is Feb. 1 making Advil painkiller, Chapstick and Centrum multivitamins lip balm.

U.S. drug manufacturer Pfizer, which is yet to make public any details about the whole sale process, is planning to sell the business for not less than $20 billion.

J&J was seen as the leading contender as the American healthcare giant has plans to continue expanding its health portfolio and product offering and has the required financial strength for a big acquisition. The company initially partnered with Goldman Sachs on a possible bid but subsequently pulled out.

In a statement, Ernie Knewitz, J&J’s vice president of media relations said the company is not in any negotiations to acquire Pfizer’s consumer business. He added that any such news going around is mere rumors and speculations. Goldman is yet to comment on the news.

GSK has Citi and JPMorgan to work on the deal, while Reckitt has hired to Bank of America. Reckitt, Britain’s GSK, JPMorgan, Bank of America and Citi have not issued any comments on the latest development.

Pfizer spokeswoman declined to issue any comment on the matter and instead said any decision on the business unit will be made in 2018. Pfizer CEO Ian Read wants to direct the company’s energy and resources on prescription medicines.

If implemented, the transaction will be a game-changer for rival consumer goods group Reckitt and drugmaker GSK by making them one of the largest players in the consumer health globally. This is an increasingly lucrative sector as health-conscious consumers and ageing populations drive demand for self-medication.

Although consumer medicines which are sold over the counter come with lower margins than prescription drugs, they are familiar with loyal consumers and very durable brands.

The prospective acquisition, which is being fronted by Centerview Partners, Morgan Stanley and Guggenheim Securities, was first mentioned on Oct. 10, when Pfizer launched the strategic review for the business unit. The unit reported sales of about $3.4 billion in 2016.