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The disposal of a group of animal health products as part of Pfizer’s (NYSE: PFE, AAA/Aa2) acquisition of Wyeth (NYSE: WYE, A+/A3) is currently in “normal course stages” and not in advanced discussions, a source familiar with the situation told dealReporter. He said there is currently no lead horse at this point but that several parties are showing interest.
A second source and a third source familiar with the situation said JPMorgan is leading the auction. The second source said the bank had likely reached out to prospective buyers three to four weeks ago, describing the process as straightforward. He noted that an announcement could possibly be made in the next six weeks.
“I don’t think there are a lot of due diligence issues,” he said. Most of the bidders would already be familiar with the products, he added.
On 3 April Pfizer announced that it had received a request for additional information, or a second request, from the Federal Trade Commission regarding its USD 68bn cash and stock acquisition with Wyeth. Pfizer said it intends to respond expeditiously to this request and continue to work cooperatively with the FTC in connection with its review. Spokespeople for Pfizer did not return calls seeking comment.
The second source said the process needs to move pretty fast or it could hold up the close of the deal. This news service previously reported that the deal could close before 31 October.
As for bidding interest for the animal health products, the second source and a fourth source familiar with the situation agreed that Novartis and Bayer were likely in the process. The second source also suggested privately-held Boehringer Ingelheim would also be in the race.
Meanwhile the first and second source said Sanofi-Aventis was a likely party but would not be “looking that hard.” The Paris-based company would find it quite hard to work this disposal into its Merial joint venture, the second and fourth source said.
“I wouldn’t be surprised if a European company buys this,” said the second source. He said Novartis could move very fast, while Bayer and Boehringer Ingelheim are notoriously slow.
Bayer and Novartis spokespeople declined to comment for this story.
A spokesperson for Boehringer Ingelheim declined to comment on any state of negotiation. However, she said Boehringer Ingelheim is looking into interesting opportunities. “We will certainly not do a major merger and buy additional sales by going together with a prescription medicine company such as Pfizer or GlaxoSmithKline or whatsoever,” she said. “But in separate business areas we are open to discuss opportunities.”
In 2008 Boehringer Ingelheim received net sales of EUR 467m in its animal health business. It is ranked eight in global market share; Novartis is number seven while Bayer holds the fourth position. Schering Plough’s Intervet/SP business is ranked number one in market share, while Pfizer is number two and Sanofi’s Merial JV with Merck is number three.
The first source said outside of the group of assets that are on the block, the only other antitrust issue could be the over-the-counter (OTC) business. “Each of these deals are going to be gnats on the side of the elephant,” he said. “It’s not like Pfizer is selling their animal health business. There are some products that need to be sold that are overlap products.”
Wyeth’s line of OTC products include Advil, Alavert, Anbesol, Caltrate, Centrum, Chapstick, Dimetapp, Dristan, FiberCon, Preparation H, Primetene Tablets, Robitussin and Thermacare. Yet, this source said he could not see Wyeth selling that asset in the near term.
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