P&G (PG) Acquires Merck KGaA's Consumer Health Business

Procter & Gamble Company (NYSE:PG) , commonly known as P&G, completed its previously announced acquisition of the consumer-health business of Germany-based Merck KGaA. Agreed upon in April 2018, the acquisition includes Merck KGaA’s consumer health business worth $1 billion that provides a wide range of over-the-counter (OTC) products for relieving pain as well as for supporting physical activity and mobility. Additionally, it will acquire a 51.8% stake in India-listed Merck Ltd.

This buyout is likely to bolster P&G’s OTC geographic footprint as Merck KGaA’s consumer health business is active in 44 countries and includes more than 900 products. The addition of Merck KGaA’s differentiated and physician-supported brands will enhance P&G's existing consumer healthcare capabilities and brands such as Vicks, Pepto-Bismol, and Oral-B. It is expected to boost the company’s brand portfolio and category footprint in most of the world’s top 15 OTC markets.

P&G believes that the acquisition will also provide strong healthcare commercial and supply capabilities, deep technical mastery, and proven consumer healthcare leadership. As part of this acquisition, P&G created a new healthcare organization, which will enable consumers to live longer, healthier and more vibrant lives as well as boost the company’s sales and profits.

With this acquisition, the president and CEO of Merck KGaA Consumer Health, Uta Kemmerich-Keil, will lead P&G’s Personal Healthcare International. This organization encompasses the recently merged consumer healthcare businesses in Europe, Latin America and Asia/IMEA (India, the Middle East and Africa).

Additionally, the company expects the transaction to boost its focus on science and technology. These new brands will expand the company’s OTC product offerings, capable of relieving muscle, joint and back pain, cold, and headache. Moreover, these offerings will include products for enhancing physical activity and mobility.

Conclusively, we believe the acquisition not only complements P&G’s existing consumer healthcare capabilities and brands but is also capable of expanding the company’s position in the largest and fast-growing segments in the consumer health market.

P&G's shares did not react much to the news. However, this Zacks Rank #3 (Hold) stock gained 12.1% in the last three months, outperforming the industry’s 6% growth.

Looking for Better-Ranked Consumer Staples Stocks? Check These

Church & Dwight Co., Inc. (NYSE:CHD) has a Zacks Rank #2 (Buy) and average long-term EPS growth rate of 10.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The Estee Lauder Companies Inc. (NYSE:EL) , also a Zacks Rank #2 stock, is expected to witness average long-term EPS growth rate of 11.9%.

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