Bayer AG: Bidding to win Merck’s OTC business

Research output: Memorandum/expositionResearch case

Abstract

Shortly after submitting their best and final offer to acquire Merck's Consumer Care Division, a collection of "over-the-counter" (OTC) products with sales totaling $2 billion, the Bayer M&A team was given a chance to revise their bid because another potential acquirer - likely Reckitt-Benckiser, a UK based company that had outbid them in a few prior acquisition auctions - had submitted a last-minute offer to Merck. Frank Rittgen (Head of M&A) and Werner Baumann (CFO) have to decide whether to increase the cash portion of their $14.2 billion offer and/or amend the terms of a proposed joint venture (JV) with Merck involving cardiovascular drugs which had been included in their offer as a way to "sweeten" the deal. Under the current terms of the proposed JV, Merck would pay Bayer $1 billion upfront for access to their pipeline of drugs and could pay up to another $1.2 billion in contingent payments based on actual sales. Alternatively, the Bayer team could hold fast on both fronts and let their final bid stand. With only an hour to make a decision regarding one of the industry's "transformational assets", the Bayer team had to move quickly and carefully as they were determined not to overpay for the asset.
Original languageEnglish
Publication statusPublished - 2017

Bibliographical note

Subjects covered: Acquisition; Auctions; Business units; Cash flow; Competitive bidding; Competitive strategy; Corporate strategy; Mergers & acquisitions; Negotiation; Strategy; Synergy; Taxation; Valuation

Research programs

  • RSM F&A
  • RSM S&E

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