P&G acquires Merck KGaA’s Consumer Health division ($4.3bn), but investors don’t welcome the move

P&G informed today it has acquired Germany-based Merck KGaA’s Consumer Health division for $4.2bn (€3.4bn). The news was announced soon after the Cincinnati, US-based giant had posted disappointing Q1 results, which had caused its shares to drop.  According to the WSJ, the transaction will not improve P&G’s growth estimates, since the acquired division has not an adequately high sales volume to influence the group’s results–that is over $66bn sales in 2017. P&G is struggling due to decreasing competitiveness and shrinking margins, like other large FMCG producers, as shown by its competitors’ shares plunging. Indeed, Colgate’s shares have lost 2.7% and Clorox’s have lost 4.9%. Merck KGaA has dismissed the asset in order to fund its pharmaceutical arm and the development of novel drugs. P&G’s shares have lost 3%, while  Merck KGaA’s have risen as little as 0.44% (Frankfurt).

(Source: WSJ)