GSK left as sole bidder for Pfizer consumer health unit

GlaxoSmithKline is understood to be the sole bidder for Pfizer’s $15-20bn consumer health unit after Reckitt Benckiser pulled out.

Reckitt’s shares jumped after it published a short statement saying it had ended discussions with Pfizer, noting that it was only interested in buying part of Pfizer’s business.

The Financial Times said that Reckitt’s chief executive Rakesh Kapoor said in a statement that “an acquisition for the whole Pfizer consumer health business did not fit our acquisition criteria and an acquisition as part of the business was not possible.”

This leaves GlaxoSmithKline as the only remaining bidder for the business , which Pfizer put up for sale in October, according to press reports.

Citing sources familiar with the matter, Bloomberg said Reckitt and Glaxo were the only companies to have submitted non-binding bids.

Pfizer’s consumer health business is estimated to be worth between $15 billion and $20 billion, and sells popular products such as painkiller Advil and the dietary supplement Centrum.

Sanofi, Nestle, and Johnson & Johnson reportedly considered making bids, then backed out, according to the reports.

Citing a company spokesperson, Bloomberg said Pfizer is continuing to evaluate options for the business – including a spinoff, sale, another transaction, or retaining the business. GSK has remained silent on the matter.

Analyst John Boris, from Suntrust Robinson Humphrey said that Pfizer could keep the business and revisit a possible sale in the future, saying that there is a “low probability” that the sale will go ahead.

He said that the growth prospects for consumer products are poor because of competition from store-brand generics, and online retailers like Amazon.

What GSK does next will be a test of its new CEO, Emma Walmsley, whose previous role was leading GSK's consumer division.  Walmsley has stressed that the pharma business is her firm's number one priority, and says she would't want to divert investment away from this core business, or pay too much for a consumer health acquisition.

Earlier this week it emerged that GSK's new head of pharma operations Luke Miels had set a 20% budget savings target. An acquisition of the Pfizer division would require synergies on the same scale, but GSK may decide the growth potential would not outweigh the task of integration.