Glaxo pushes up price of Pfizer arm

GlaxoSmithKline Plc is to bid more than $15 billion for the consumer healthcare business of US rival Pfizer Inc, people familiar with the situation said yesterday.

The move raises the bar in the auction for the $3.9-billion-a-year over-the-counter (OTC) medicines business, whose top-selling brands include Listerine mouthwash, Sudafed decongestant and Rolaids antacid.

Previously, analysts had estimated the business would sell for around $14 billion, or 3.6 times annual sales, which was the multiple paid by Reckitt Benckiser Plc for Boots Healthcare International last year. Glaxo lost out in that sale. Industry sources told Reuters that Glaxo, along with Johnson & Johnson and Reckitt, were frontrunners to acquire the Pfizer business after the CEO of Colgate-Palmolive Co. played down talk of its interest.

Final bids for the division are due on Tuesday.

A bid of more than $15 billion from Glaxo, first reported in the Financial Times, would underscore the value consumer health companies put on a prize asset in a fast-consolidating sector.

"I think this is going to be a very competitive sale process. It's not clear if this will be a knock-out bid or not," said one person close to the matter.

Chief executive officer Jean-Pierre Garnier said last month that Europe's biggest drugmaker was looking at ways to build up its OTC operations but a company spokesman declined to comment on its interest in the Pfizer unit yesterday.

Other companies involved have also declined comment. Germany's Bayer AG is still considering its position, along with Wyeth, while Novartis AG, which entered a first round bid, has dropped out of the running, according to sources. Glaxo shares were 0.5 per cent lower at £14.88 by 0725 GMT, the biggest losers in the FTSE 100 index, which added 0.6 per cent.