GlaxoSmithKline Pulling Out of Race for Consumer Assets of Pfizer

GlaxoSmithKline will no longer take part in the race to acquire the consumer healthcare business of Pfizer. This threatens an auction the drug maker based in the U.S. had hoped would produce up to $20 billion.

It was not clear if there were other offers for the consumer healthcare business, which includes Centrum vitamins, Advil painkillers and much more, following the deadline this week for bids.

GSK, which announced the withdrawal Friday, was considered the frontrunner to acquire the assets following the exit in the race late Wednesday of Reckitt Benckiser. Johnson & Johnson backed out in January.

A source close to the situation said that GSK had declined to make a last bid for the assets.

CEO at GSK Emma Walmsley said through a prepared statement that while the company continues to review its opportunities that might accelerate its strategy, they need to meet the criteria we have for returns and not compromise the priorities for capital allocation.

Shares of GSK were up 4% as investors’ worries about a possible cut in dividend were eased.

On Friday, Pfizer said that it continued evaluating possible alternatives for its business, which includes a sale, spin off, or other form of transaction, along with potentially keeping it.

A decision has yet to be made but Pfizer continues to expect that in 2018 one will be.

Sources who are familiar with the situation said Thursday that it was possible other bids were received, and on Friday another source said if not, Pfizer would attempt to interest private equity funds.

U.S. based Pfizer is the fifth largest consumer healthcare player in the world with 2.5% of the market that is bolstered by populations that are aging and a growing interest in both health and wellness.

The consumer healthcare business, which includes as well Caltrate supplements and Chapstick lip balm, is looked at as very attractive but arrived at market during a bad time. Reckitt and GSK are under pressure from shareholders to maintain financial disciplines, while any other possible suitors, like Bayer and Sanofi are too busy with projects of their own.

The global market for consumer health has slowed, from between 4% and 6% of sales growth to only 0 to 3% said a market research analyst report.

Major over the counter market players have grappled with price pressure stoke by e-commerce heavyweights like Amazon and private label competition.

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