Case Folio
The P&G-Merck KGaA Consumer Health Business Merger

Article Details
Pub. Date : Mar' 2021
Product Name : The IUP Journal of Case Folio
Product Type : Article
Product Code : IJCF30321
Author Name : Manish Agarwal and Sanjib Dutta
Availability : YES
Subject/Domain : Management
Download Format : PDF Format
No. of Pages : 15

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Abstract

The case discusses the M&A deal between the Germany-based global pharmaceutical company Merck KGaA and the US-based, multinational FMCG company P&G. In this deal, P&G acquired a 100% stake in the consumer health business of Merck KGaA for $4.2 bn. The case helps the students understand the various aspects of an M&A deal. It explores the rationale behind the merger deal, from both P&G's and Merck KGaA's perspective. It discusses the various developments that took place before and after the merger was announced. It provides sufficient scope to debate the various possible synergies and various challenges related to this deal. The case ends with a debate on whether the merger would be successful or not.


Description

On April 18, 2018, US multinational FMCG major Procter & Gamble Company (P&G) acquired a 100% stake in the Consumer Health Business (CHB) of Merck KGaA (Merck), a global pharmaceutical company headquartered in Germany. David Taylor, Chairman of the Board, President and Chief Executive Officer of P&G, said, "We like the steady, broad-based growth of the OTC Healthcare market and are pleased to add the consumer health portfolio and people of Merck KGaA, Darmstadt, Germany, to the P&G family."2 Stefan Oschmann, Chairman of the Executive Board and CEO of Merck, said, "Consumer Health is a strong business that deserves the best possible opportunities for its future development. With P&G we have found a strong, highly recognized player who has the necessary scale to successfully drive the business going forward."3

This acquisition helps us continue to drive sales and profit growth for P&G by providing the capabilities and portfolio scale we need to operate a winning global OTC business on our own, without the aid of a healthcare partner.1

-Tom Finn, President, P&G Global Personal Healthcare, April 2018.


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