Jones Lang LaSalle
Small companies lurking in wings of a Pfizer deal
They could snag scraps of consumer sale
Sunday, April 16, 2006
BY GEORGE E. JORDAN
Star-Ledger Staff
Pfizer's over-the-counter business is a mouthful.
There's Lubriderm skin cream, Benadryl allergy products, Sudafed decongestant, Visine eye drops and the prize franchise, Listerine mouthwash. The venerable stable of household names had sales of $3.9 billion last year.
PAGE 8 When Pfizer announced two months ago it might sell the business, it made sense that any potential buyers might want to cast off several brands, whether to meet antitrust concerns or to cast away non-core products.
That's why Pfizer said all or nothing: one buyer for the Morris County-based division, valued at $10 billion, or the world's largest drug company would spin it off as a separate pubic company.
But a handful of tiny compa nies said they are waiting on the sidelines for the scraps, because Pfizer's OTC business is so vast. Nine of its products have more than $100 million in annual sales and as a stand-alone company, the unit would be the third-largest over-the-counter health goods seller, behind Wyeth and Johnson & Johnson.
If Pfizer sells, a single buyer would increase the chances for a smaller company to pick up a hot property on the cheap, analysts and company executives said. The second-tier players include Chat tem, Premiere Brands and Adams Respiratory Therapeutics.
"There could be some very exciting opportunities may be coming out of that," Zan Guerry, chairman and chief executive of Chattem, said in a recent conference call with analysts and reporters. "And certainly that's probably the best news. Somebody will shake free some por tions of it."
Chattem's product line includes topical pain reliever Icy Hot, Gold Bond lotion and powder and Selsun brand shampoo. The Chattanooga, Tenn.-based company, with sales last year of $279 million, would jump at a chance to acquire a piece of Pfiz er's strong cough, cold and al lergy franchise.
But with market capitalization of $727 million, Chattem is only a fraction of the estimated $10 billion price tag on Pfizer consumer division. In fact, probably the only way Chattem could get into the game is buying another company's hand-me-downs.
The top suitors for Pfizer's OTC business include Novartis, GlaxoSmithKline, Colgate-Palmolive, Reckitt Benckiser, Johnson & Johnson, Bayer and Procter & Gamble. They all have the ability to raise enough cash to close the sale, and all would have reasons to keep or sell various pieces of Pfizer's product lines.
Corinne Hoff, spokeswoman for Swiss-based Novartis; Johnson & Johnson spokesman Marc Monseau; and GlaxoSmithKline spokesman Malesia Dunn all declined to comment. A spokesman for Colgate-Palmolive and Lon don-based Reckitt Benckiser could not be reached for comment.
"We're making progress in the company's review of strategic op tions for the business," Pfizer spokesman Paul Fitzhenry said in a telephone interview Thursday. "The initial interest from poten tial buyers has been high."
Fitzhenry said a decision to sell or spin off the unit would come by the third quarter of this year. He said the company plans to finalize a transaction by year's end.
Wall Street analysts said the company began accepting bids March 31.
Pfizer amassed its stable of over-the-counter products through mergers, with the lion's share coming from Pharmacia and Warner-Lambert, which had deep roots in New Jersey.
The Morris Plains-based consumer business has 3,500 employees worldwide, with two-thirds of them in New Jersey.
For Pfizer, the time is right to sell the consumer products divi sion because it can command a healthy premium, as foreign companies charge into the business. Last year, for example, Bristol- Myers Squibb sold its consumer products business to Novartis for $660 million.
Typically, when pharmaceuti cal and personal care companies acquire companies, they sell off several product lines. They may already own competing products or they may be ordered to divest under the Hart-Scott-Rodino Act, which empowers the Federal Trade Commission to regulate mergers that may restrain competition.
That creates a potential opportunity for a small company like Chester-based Adams Respi ratory, which had its initial public offering last year and has one product, a cough medicine known as Mucinex, which had 2005 sales of $63.2 million.
"We would look at it as a po tential opportunity to maybe pick off some things that are interesting to us should an acquirer have to divest portions of the business," Mike Valentino, Adams' president and chief executive, said in a recent conference call with analysts.
George E. Jordan covers the pharmaceutical industry. He may be reached at gjordan@starledger.com or (973) 392-1801.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
Small companies lurking in wings of a Pfizer deal
They could snag scraps of consumer sale
Sunday, April 16, 2006
BY GEORGE E. JORDAN
Star-Ledger Staff
Pfizer's over-the-counter business is a mouthful.
There's Lubriderm skin cream, Benadryl allergy products, Sudafed decongestant, Visine eye drops and the prize franchise, Listerine mouthwash. The venerable stable of household names had sales of $3.9 billion last year.
PAGE 8 When Pfizer announced two months ago it might sell the business, it made sense that any potential buyers might want to cast off several brands, whether to meet antitrust concerns or to cast away non-core products.
That's why Pfizer said all or nothing: one buyer for the Morris County-based division, valued at $10 billion, or the world's largest drug company would spin it off as a separate pubic company.
But a handful of tiny compa nies said they are waiting on the sidelines for the scraps, because Pfizer's OTC business is so vast. Nine of its products have more than $100 million in annual sales and as a stand-alone company, the unit would be the third-largest over-the-counter health goods seller, behind Wyeth and Johnson & Johnson.
If Pfizer sells, a single buyer would increase the chances for a smaller company to pick up a hot property on the cheap, analysts and company executives said. The second-tier players include Chat tem, Premiere Brands and Adams Respiratory Therapeutics.
"There could be some very exciting opportunities may be coming out of that," Zan Guerry, chairman and chief executive of Chattem, said in a recent conference call with analysts and reporters. "And certainly that's probably the best news. Somebody will shake free some por tions of it."
Chattem's product line includes topical pain reliever Icy Hot, Gold Bond lotion and powder and Selsun brand shampoo. The Chattanooga, Tenn.-based company, with sales last year of $279 million, would jump at a chance to acquire a piece of Pfiz er's strong cough, cold and al lergy franchise.
But with market capitalization of $727 million, Chattem is only a fraction of the estimated $10 billion price tag on Pfizer consumer division. In fact, probably the only way Chattem could get into the game is buying another company's hand-me-downs.
The top suitors for Pfizer's OTC business include Novartis, GlaxoSmithKline, Colgate-Palmolive, Reckitt Benckiser, Johnson & Johnson, Bayer and Procter & Gamble. They all have the ability to raise enough cash to close the sale, and all would have reasons to keep or sell various pieces of Pfizer's product lines.
Corinne Hoff, spokeswoman for Swiss-based Novartis; Johnson & Johnson spokesman Marc Monseau; and GlaxoSmithKline spokesman Malesia Dunn all declined to comment. A spokesman for Colgate-Palmolive and Lon don-based Reckitt Benckiser could not be reached for comment.
"We're making progress in the company's review of strategic op tions for the business," Pfizer spokesman Paul Fitzhenry said in a telephone interview Thursday. "The initial interest from poten tial buyers has been high."
Fitzhenry said a decision to sell or spin off the unit would come by the third quarter of this year. He said the company plans to finalize a transaction by year's end.
Wall Street analysts said the company began accepting bids March 31.
Pfizer amassed its stable of over-the-counter products through mergers, with the lion's share coming from Pharmacia and Warner-Lambert, which had deep roots in New Jersey.
The Morris Plains-based consumer business has 3,500 employees worldwide, with two-thirds of them in New Jersey.
For Pfizer, the time is right to sell the consumer products divi sion because it can command a healthy premium, as foreign companies charge into the business. Last year, for example, Bristol- Myers Squibb sold its consumer products business to Novartis for $660 million.
Typically, when pharmaceuti cal and personal care companies acquire companies, they sell off several product lines. They may already own competing products or they may be ordered to divest under the Hart-Scott-Rodino Act, which empowers the Federal Trade Commission to regulate mergers that may restrain competition.
That creates a potential opportunity for a small company like Chester-based Adams Respi ratory, which had its initial public offering last year and has one product, a cough medicine known as Mucinex, which had 2005 sales of $63.2 million.
"We would look at it as a po tential opportunity to maybe pick off some things that are interesting to us should an acquirer have to divest portions of the business," Mike Valentino, Adams' president and chief executive, said in a recent conference call with analysts.
George E. Jordan covers the pharmaceutical industry. He may be reached at gjordan@starledger.com or (973) 392-1801.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
posted by Jones Lang LaSalle NJ News Blog at 1:46 PM
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