A potential sale or spinoff of Pfizer's (PFE) consumer health unit looks like a sound move for Ian Read's pharmaceutical company after scrapping plans to split into two public companies. Such a move would likely command interest from a number of Big Pharma companies looking to bulk up their own over-the-counter units.
Pfizer's consumer health business, which operates as part of the Pfizer Innovative Health segment and is home to brands including Chapstick and Advil, could fit with a lot of pharmaceutical companies that already encompass consumer units.
At the same time, such a move could theoretically add to the pharma giant's existing war chest for potential transformative M&A, which looks more likely following a Republican sweep that increases the likelihood that offshore profits are repatriated to the U.S.
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Germany's Bayer (BAYRY) , which spent $14.2 billion for Merck's (MRK) unit in 2014 to add brands including Claritin allergy medication and Dr. Scholl's footcare products, would also be a logical buyer if it weren't still working to complete its $66 billion deal for Monsanto (MON) , he added. Meanwhile, Glaxo and Novartis (NVS) in 2015 fused their consumer health businesses through a joint venture to be run by Glaxo.
"It's one of the better consumer units out there," Conover said in an interview Thursday, describing the unit as solidly positioned but not "critical" for the New York pharma to retain. "It's going to get a solid valuation."
Pfizer shares rallied about 4.7% to $33.64 Thursday after Reuters reported late Wednesday that the company is evaluating a potential sale or spinoff of its consumer health division that could value the unit at as much as $14 billion.
Pfizer spokeswoman Sally Beatty told The Deal Thursday the company doesn't comment on speculation, but noted by email that Read's comments about the unit on Pfizer's Nov. 1 third-quarter earnings call stand true.