Procter & Gamble's Prescription Drug Business Set to be Acquired by Warner Chilcott

Strategic Insights -

Warner Chilcott, a specialty drug maker, has announced plans to acquire Procter & Gamble Co.'s (NYSE: PG) prescription drug business for about $3 billion, expanding its market share in the women's health market. This acquisition is part of P&G's strategy to focus on over-the-counter products and divest its interest in the healthcare brands, amidst increasing pressure from generics. Private equity firm Cerberus Capital Management and drug maker Forest Laboratories (FRX) had also shown interest in purchasing P&G's prescription drug business. The deal is expected to be financed by several banks, including Bank of America Corp. (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM), and Credit Suisse (NYSE: CS), who will provide about $4 billion in financing.

Key Takeaways:

  • Procter & Gamble Co. (NYSE: PG) is selling its prescription drug business to Warner Chilcott for about $3 billion.
  • The acquisition is expected to expand Warner Chilcott's market share in the women's health market.
  • P&G's decision to divest its prescription drug business is a result of increasing pressure from generics.
  • Private equity firm Cerberus Capital Management and Forest Laboratories (FRX) had also shown interest in purchasing P&G's prescription drug business.
  • The deal is expected to be financed by several banks, including Bank of America Corp. (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM), and Credit Suisse (NYSE: CS), who will provide about $4 billion in financing.
  • Warner Chilcott will run the newly acquired business as its 100% subsidiary.
  • P&G will continue to focus on over-the-counter products such as Pepto Bismol, Prilosec, Vicks cough medicines, and personal care brands.

Statistics:

  • $3 billion: The price at which Procter & Gamble Co. (NYSE: PG) is selling its prescription drug business to Warner Chilcott.
  • $4 billion: The amount of financing being provided by several banks, including Bank of America Corp. (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM), and Credit Suisse (NYSE: CS).
  • 100%: The percentage subsidiary control that Warner Chilcott will have over the newly acquired business.
  • $1 billion: The amount of financing being used by Warner Chilcott for refinancing its existing debt.

Sources:

  • "P&G Finds Buyer for Drug Business" (Zacks.com)
  • http://at.zacks.com/?id=4579 (Zacks.com)
  • "About Zacks Equity Research" (Zacks.com)
  • http://at.zacks.com/?id=2649 (Zacks.com)
  • "About Zacks" (Zacks.com)
  • http://www.zacks.com/performance (Zacks.com)