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.
“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.
Article Source: Bloomberg