Glaxo Is Said to Have Submitted Final Bid to Buy Pfizer Unit
A blister pack containing Lamictal anti-epileptic tablets, produced by GlaxoSmithKline Plc. (Photographer: Chris Ratcliffe/Bloomberg)

Glaxo Is Said to Have Submitted Final Bid to Buy Pfizer Unit

(Bloomberg) -- GlaxoSmithKline Plc has submitted a binding bid to acquire Pfizer Inc.’s consumer health unit, people familiar with the matter said, leaving the U.K. drugmaker as the frontrunner for the assets after Reckitt Benckiser Group Plc withdrew from the process.

Glaxo made a final bid Wednesday that could value the U.S. giant’s over-the-counter treatments at about $15 billion to $20 billion, the people said, asking not to be identified because the matter is private. Pfizer, based in New York, could still opt not to sell to Glaxo and pursue a potential spinoff of the unit or hold on to it, the people said.

Reckitt’s demurral has left Pfizer with dwindling options for the business, which sells popular brands such as the pain reliever Advil and the dietary supplement Centrum. Even Glaxo’s approach would be complicated by its joint venture in consumer health with Swiss drug giant Novartis AG, which has been reluctant to dive further into over-the-counter health products, the people said.

Other bidders could still emerge, the people said. A decision by Pfizer could be made within the next two weeks, they said. A spokesman for Glaxo declined to comment, while a representative for Pfizer didn’t respond to requests for comment on the U.K. company’s bid.

As bidders drop out, Glaxo is gaining leverage in any ongoing negotiations, according to Roger Franklin, an analyst with Liberum Capital.

“With Reckitt out of the picture, a cheaper deal might be possible,” he said in a note to clients.

Shares of Reckitt, which had aimed to purchase only part of the business, surged the most in nine years early Thursday after the company said it ended talks with Pfizer on the consumer assets. The stock was trading up 5.6 percent as of 11:25 a.m. in London, while Glaxo fell almost 1 percent.

“Pfizer continues to evaluate potential strategic alternatives for the Consumer Healthcare business, which include a spinoff, sale or other transaction, and Pfizer ultimately retaining the business,” the U.S. behemoth said in a statement after Reckitt announced its withdrawal.

The drugmaker could keep the business and revisit a possible sale in the future, said John Boris, an analyst with Suntrust Robinson Humphrey who advises holding the shares. “There’s a low probability that they execute the transaction,” he said.

Meanwhile, Reckitt Chief Executive Officer Rakesh Kapoor is separating the company’s home-care and health businesses in an effort to sharpen its focus on brands such as Strepsils and Mucinex cold remedies. The Slough, England-based company also became a leader in infant nutrition with the $16.6 billion acquisition of Mead Johnson Nutrition Co. last year.

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