Fresh from its £1.9bn purchase of Boots' over-the-counter medicines business, Reckitt Benckiser may be angling for a much bigger fish, the $14bn (£8bn) consumer healthcare business of Pfizer.
The world's largest drugmaker announced earlier this month that it would explore "strategic alternatives", including a sale or spin-off of the business, which is home to a host of household names such as Rogaine, Listerine and Sudafed. It has hired Lazard to run the auction.
The deal would be a major one for Reckitt, which is still digesting Boots four months after it purchased the chemists. "Sometimes things come when you don't want them to, but they need to react to what's on the market at a particular time," said Andrew Wood of US stockbroker Sanford Bernstein. Reckitt has "enough desire and self-confidence to make a bid", he added. Mr Wood believes the final sale price could be pushed to $14bn.
Capturing the Pfizer division would convert Reckitt into the world's No 1 provider of over-the-counter medicines. Reckitt declined to comment.
The Boots purchase has been Reckitt's largest acquisition to date; it had to take on £800m in debt to finance the deal. To bag the Pfizer business - which is four-and-a-half times as big as the Boots unit, and would increase Reckitt's size by 45 per cent - it would need to go to its shareholders to raise cash.
Reckitt's chief executive, Bart Becht, currently enjoys strong support among investors. Since snatching the Boots unit, Reckitt's shares have climbed 15 per cent.
"Investors would be supportive for the same reason they were supportive of the Boots deal," Mr Wood said.
Consumer products companies such as Reckitt are widely considered to be more adept than drugs groups at marketing, branding and selling healthcare products.
The Pfizer unit, which had annual turnover of $3.9bn and earnings before tax of $700m, will be sure to attract several bidders, potentially Unilever, Procter & Gamble and Johnson & Johnson.Reuse content