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By Soyoung Kim and Olivia Oran
NEW YORK, Jan 31 (Reuters) - Merck & Co Inc hasreceived approaches from large consumer companies interested inbuying its consumer healthcare business, best known forCoppertone sunscreen and Claritin allergy medicine, according topeople familiar with the matter.
Merck's consumer healthcare business, which also includesDr. Scholl's foot care and other consumer products, could beworth as much as $8 billion to $10 billion in a sale, or roughlyfour to five times the unit's annual revenue, some of the peoplesaid.
Merck, the No. 2 U.S. drugmaker after Pfizer Inc, isconsidering alternatives for both its consumer and animal healthbusinesses and has said it expects to complete the review in2014.
Among a range of options it has considered for the consumerunit, Merck discussed a potential asset swap with Novartis AG, under which Merck would give up its consumer assetsin return for the Swiss drugmaker's animal health and otherunits, Reuters and others previously reported.
The probability of carrying out such a deal, however, iscurrently seen as low due to the complexity of valuing differentbusinesses, prompting Merck to explore an outright sale of itsconsumer unit as well, people familiar with the matter said.
Merck has been in conversations with several interestedparties and is being advised by Morgan Stanley on theprocess, the people said, asking not to be named because theconversations are private.
For its much larger animal health unit, the second-largestin the industry after Zoetis Inc, Merck is evaluatingthe potential of spinning it off as a separate publicly tradedcompany, people familiar with the matter said.
Analysts and people familiar with the industry say bigconsumer companies such as Reckitt Benckiser Group andProcter & Gamble Co could be logical buyers for Merck'sconsumer healthcare business.
Reckitt already owns over-the-counter medicines includingMucinex and Nurofen and the international rights for the Schollfoot care business. Its chief executive told Reuters in aSeptember interview that Reckitt aimed to be a major player inconsumer healthcare and has the firepower to do sizeable deals.
Procter & Gamble Co also has a portfolio thatincludes a range of medicines and beauty products.
Reckitt and P&G declined to comment.
Johnson & Johnson is the biggest player in the $200billion global consumer health industry, with about 4 percent ofthe market, followed by Bayer AG and GlaxoSmithKlinePlc.
Merck, however, is relatively small with around 1 percent ofthe market. Merck has said in the past that it views itsconsumer business as sub-scale.
In considering options for the consumer and animal healthbusinesses, Merck is following in the footsteps of otherdrugmakers such as Pfizer Inc, which created shareholdervalue by seperating non-core assets.
Pfizer sold its infant-nutrition business to Nestle SA for $11.9 billion in 2012, and last year spun off itsanimal health unit as a separate publicly traded company calledZoetis.
Many other drugmakers have been looking to shed businesses,prompted by pricing pressure and increasing competition that hasforced a more rigorous approach to capital allocation. They haveshown a new willingness to consider whether other companies maybe better owners for certain assets.
A Merck spokeswoman declined to comment on details of thestrategic review. Morgan Stanley did not respond to requests forcomment.
