Novartis and Merck: ‘Wanna Trade?’ Companies Propose to Swap Businesses

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Novartis AG (NYSE:NVS) and Merck & Co., Inc. (NYSE:MRK) are looking to trade businesses in an agreement that could be an earnings boost for both parties, reported Bloomberg Wednesday. In the proposed deal, Novartis would trade its animal health and human vaccines business for Merck‘s over-the-counter health products unit.

Both companies, in a reflection of current trends within the industry, have been focusing on prioritizing their core strengths while chucking other lines of business; the suggested swap would involve trading as much as $5 billion in assets, an unnamed source who spoke to Bloomberg said. The idea is not a new one, as apparently the two companies have been in talks for some time but have continued to run into difficulty because of the challenge posed by comparing the relative attraction of two very different businesses, per Reuters.

Merck’s over-the-counter line-up includes Coppertone, a popular sunblock, and Claritin allergy medicine. Both products would fit in nicely with Novartis’ current line of products for consumers, such as Triaminic cold medicine and Lamisil, an anti-fungal treatment. Both companies would prefer an asset swap over a sale, but if the proposed deal doesn’t work out, Novartis has said it will likely choose to sell its unit to one of the leading animal health firms such as Bayer AG, Zoetis, Inc. (NYSE:ZTS), Sanofi SA (NYSE:SNY), Eli Lilly & Co. (NYSE:LLY), or Boehringer Ingelheim Pharmaceuticals, Inc., according to Reuters.

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