P&G May be Ready to Wheel & Deal

Is Procter & Gamble ready to go on a spending spree? Could be, especially now that its flush with cash. P&G completed the sale of its drug business Friday, as expected, to Irish company Warner Chilcott plc.

In the deal, announced Aug. 23, Warner Chilcott will make an upfront cash payment of $3.1 billion. The sale includes P&G’s osteoporosis drug Actonel —a $1 billion brand—as well as other drugs; the co-promotion rights to overactive bladder treatment Enablex; and P&G’s prescription drug pipeline and manufacturing facilities.

P&G on Oct. 28 said the sale will give it a one-time earnings boost of 43 cents per share in the second fiscal quarter, though the final gain amount will be provided in January. If the deal closed later than Nov. 1, the value of the transaction was at risk of diminishing since the worth of the drugs depends on the life of their patents.

Proceeds from the sale will be used to reinvest in core businesses, such as consumer health care, dividends and P&G’s stock buyback program.