CINCINNATI — Warner Chilcott PLC is buying Cincinnati-based Procter & Gamble Co.'s prescription-drug business in a $3.1 billion deal that would more than double the Irish drugmaker's revenue.
Warner Chilcott, which specializes in women's health and dermatology products, will get a portfolio with $2.3 billion in annual sales, boost its offerings in women's health with a blockbuster osteo porosis treatment, and get a toehold in the urology and gastroenterology markets.
For P&G, the deal lets it focus more on consumer businesses that it thinks has high potential. In the last year, the company has sold off other businesses, including Folgers coffee and Noxzema skin-care brand. It sold Folgers to J.M. Smucker Co. for $3 billion.
"We know that our shareholders don't reward us ... for absolute size; they reward us for growth," chief executive Bob McDonald told analysts in a conference call. "And we are going to do what we have to do to get the right portfolio of businesses together."
McDonald said Monday's deal will let P&G, the world's largest consumer-products maker, concentrate more resources on consumer health care, including over-the-counter medicines Vicks and Prilosec OTC, feminine care product Always, and oral care, led by Crest toothpaste.
He said P&G has plenty of room to increase sales in the consumer health care market, which has grown 5 percent to 6 percent a year and has good margins and solid potential.
As for Warner Chilcott, just the acquisition of Actonel for osteoporosis, with more than $1 billion in annual sales, exceeds the company's 2008 revenue of $938 million. Warner Chilcott also gains colitis drug Asacol HD, bone drug Didronel, and Enablex for overactive bladder.
Roger Boissonneault, Warner Chilcott's president and CEO, called the acquisition "a transformational, strategic move for us."
Warner Chilcott's products include well-known oral contraceptives Loestrin 24 FE, Femcon FE and Ovcon, plus multiple treatments for menopause symptoms, including Femhrt, Femring and Estrace. It also sells acne treatment Doryx.
Tom Millikin, spokesman for P&G's pharma business, said about 85 percent of the 2,300 employees in that business will transfer to Warner Chilcott.
Warner Chilcott said it will borrow money from a group of banks to complete the deal, which is expected to close by year-end.
Procter & Gamble said the sale will result in a one-time gain of $1.4 billion, or about 44 cents a share. Lost profit from the business and other costs will cancel out 10 to 12 cents a share. The company expects the sale to lower its profit in future years by 16 to 18 cents a share.