Seven Seas is the UK's largest vitamins, minerals and natural supplements business and has been up for sale as part of Hanson's breakup plans, which were announced in January.
Battery maker Ever Ready South Africa, Hanson's remaining consumer business apart from Imperial Tobacco, is also on the disposal block as the group tidies itself up for the demerger.
Neither Hanson nor Merck would comment officially on the Seven Seas sale. But one source close to the talks said that the deal was "95 per cent there".
"But 95 per cent is not 100 per cent," the source added.
Other firms understood to have been in talks with Hanson include Whitehall of the US, the US-Swedish combine Pharmacia & Upjohn, Germany's Bayer and Swiss pharmaceuticals giants Sandoz and Roche.
Clinching the deal would be a big boost for Merck's European expansion plans, which last week saw it buy French medication firm Laboratoires Monot. In 1992, it was beaten by Roche for Fisons' Sanatogen, the UK's second largest vitamins business.
Founded in 1668, the firm owned Merck of the US - now the world's second biggest drugs firm - until its assets were confiscated after the First World War.
Seven Seas made profits of pounds 9m on sales of pounds 50m last year and has the royal warrant for products that include cod liver oil, Haliborange, Hofels garlic capsules and Phillips Pet Care.
Analysts have put its value at pounds 130 to pounds 170m, while Ever Ready South Africa may fetch pounds 160 to pounds 190m. However, increasing competition from new entrants and supermarket own brands may be a stumbling block to achieving a sale at a premium price.
The UK is Europe's second largest vitamins and supplements market, with sales of pounds 310m in all last year. But it is dwarfed by health-conscious Germany, which notched up more than pounds 1.7bn in 1995.
Hanson recently floated domestic gas supplier Suburban Propane and sold Cavenham Forest Industries for $2.1bn (pounds 1.37bn), both in the US, to pave the way for its four-way demerger.
This weekend the firm said flotations of Imperial Tobacco and chemical operations will take place after the summer. Energy - including Eastern Electricity - will be floated in December, leaving a rump building materials group bearing the Hanson name.Reuse content