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* Reckitt pulls out after trying to buy only part of unit
* Decision strengthens GSK's hand as alternative bidder
* Pfizer still reviewing options and could keep business
* Reckitt shares up 5 percent, GSK down 1 percent(Adds market reaction, more on Reckitt decision, analystcomment)
By Greg Roumeliotis and Ben Hirschler
Reckitt dropped out of the sale process late on Wednesday,the day before the
Reckitt said its proposal had only been for part of thePfizer business, without giving further details. One personfamiliar with the matter said the company had been mostinterested in acquiring the painkiller Advil.
It is also possible that Pfizer will receive more offers byThursday's deadline for bids, the sources added. Alternatively,the
Pfizer has been hoping to fetch as much as
"An acquisition for the whole Pfizer consumer healthbusiness did not fit our acquisition criteria and an acquisitionof part of the business was not possible," Reckitt said.
Reckitt's priority would remain organic growth andintegration of
Shares in Reckitt jumped 5 percent on Thursday on reliefthat the company would not be over-leveraging itself orconsidering a dilutive rights issue to fund an ambitiousacquisition, while GSK slipped 1 percent.
But the decision not to pull the trigger on the Pfizer dealis a blow for Chief Executive Rakesh Kapoor, who has longcoveted the Pfizer operation as a means to bolster Reckitt'sposition in consumer health (CH).
"If indeed RB has opened the door for Pfizer CH to beacquired by GSK, it might end up significantly strengthening oneof its main CH competitors," said Bernstein analyst Andrew Wood.
DURABLE BRANDS
Although consumer remedies sold over the counter have lowermargins than prescription drugs, they are typically very wellknown and durable brands with loyal customers.
Pfizer said it was reviewing the future of the consumerbusiness following the Reckitt decision.
"Pfizer continues to evaluate potential strategicalternatives for the consumer healthcare business, which includea spin-off, sale or other transaction, and Pfizer ultimatelyretaining the business. We have not yet made a decision, butcontinue to expect to make one in 2018," Pfizer said in astatement.
For GSK, a deal to buy the consumer business would be theboldest move to date for new CEO Emma Walmsley, who took overlast April. It would further increase the company's leadingposition in consumer health, an increasingly lucrative sector asaging populations and health-conscious consumers drive demandfor self-medication.
GlaxoSmithKline has struggled with a scarcity of promisingnew drugs in its pipeline at a time of mounting competition inits core respiratory and HIV divisions.
Adding Pfizer's consumer healthcare business would likelyboost GlaxoSmithKline's earnings, given the economies of scalethe enlarged business would enjoy, but would also stretchGlaxoSmithKline's finances, analysts have said.
GlaxoSmithKline runs its consumer healthcare business via ajoint venture with Novartis AG. Novartis has the rightto sell down its minority stake starting from this month,although it has previously indicated it is in no rush to do so.
"You would expect us to take a serious look at any leadingand very appealing assets in the sector because we are a worldleader in consumer healthcare and have a very good track recordof integrating businesses successfully," GlaxoSmithKline'sWalmsley said last month.
"We will be extremely focused on discipline around returnsand frankly, this is not a need to do."(Additional reporting by Carl O'Donnell in
