What next for RB after exit from Pfizer consumer goods sale

At least Rakesh Kapoor can console himself that his share price was up by 5% on Thursday.

The chief executive of RB, the personal care and household goods giant whose brands include Nurofen, Durex, Mr Sheen, Cillit Bang and Dettol, has for the last year or so been eyeing the consumer goods arm of US drugs giant Pfizer (NYSE: PFE - news) .

RB even reorganised itself last October into two divisions - RB Health and RB Hygiene Home - in a move widely seen as a precursor to a demerger, but that would also have made an immense amount of sense had the company succeeded in buying Pfizer's consumer goods arm.

It would have left the enlarged RB Health group as one of the world's biggest consumer healthcare companies.

But it has emerged that RB is no longer in the running to buy the business, whose brands include Chapstick lip balm, Centrum multi-vitamins and Advil painkillers, for which Pfizer is seeking between $18-$20bn (£12.7bn-£14bn).

RB's withdrawal from the process has lifted the risk of its shareholders being asked to put up cash to help fund the deal - which is why its shares are up.

RB's withdrawal leaves the way clear for another British company, drug-making giant GlaxoSmithkline (Other OTC: GLAXF - news) , to buy the business.

GSK, whose consumer brands include Nicorette, Aquafresh, Horlicks and Sensodyne, declared its interest last year and its chief executive, Emma Walmsley, said last month it was taking a "serious look".

Ms Walmsley is steeped in consumer goods and has an intimate knowledge of the sector. She (Munich: SOQ.MU - news) previously ran GSK's consumer healthcare arm and, prior to joining the company, she worked for 17 years at L'Oreal.

The industrial logic behind buying Pfizer's consumer goods arm is that it would bring greater consistency to GSK's earnings when developing drugs is more expensive and unpredictable than ever. There would be enormous scope for cost-saving in addition.

The risk for GSK is that Pfizer, which has only admitted it is reviewing the future of its consumer healthcare business, decides it does not want to sell to a direct competitor.

It is far from clear that GSK's shareholders would welcome such a deal either. Some fear it would impact on GSK's ability to pay dividends at the present level and would prefer to see the company investing more in drug discovery.

Neil Woodford, previously GSK's best known shareholder, sold his entire stake in the company in May last year in frustration at its refusal to consider breaking itself into four constituent companies.

All this intrigue comes at a fascinating period for the fast-moving consumer goods (FMCG) sector.

In mature markets, consumers - especially Millennials - are increasingly seeking new experiences, seeking out small brands, particularly with an artisanal or 'craft' appeal.

At the same time, established brands face increased competition from cheap and own-label products, a phenomenon that has proved particularly testing for the likes of Kellogg (Hamburg: 944624.HM - news) 's .

There are three solutions to this. One is to buy 'challenger' brands, as Unilever (NYSE: UL - news) did in 2016, with its $1bn acquisition of Dollar Shave Club.

Another is for big companies to invest in these brands themselves, as drinks giant Diageo (LSE: DGE.L - news) has with Distill Ventures, which provides financial support to entrepreneurs creating and building their own drink brands.

Among the brands backed by Distill Ventures is Belsazar, a trendy vermouth brand developed in Germany, which last week it bought outright.

The third option is for big FMCG companies to merge - as, for example, Kraft Foods did with Heinz three years ago.

There will certainly be more of the latter.

While Unilever's announcement last week that its unified headquarters will be in Rotterdam and not London attracted most headlines, the company also revealed it will be "evolving" its structure into three divisions: Beauty & Personal Care, Home Care and Foods & Refreshment.

The largest of these, Foods & Refreshment, will be based in the Netherlands with the other two based in the UK.

The logic of moving to a single shareholder structure is that, should it wish to do big acquisitions in future, Unilever will find it easier to issue new shares to help pay for them.

But some analysts think it could just as easily offload its Food & Refreshment arm, whose growth prospects are not seen as strong as the other two divisions.

That would then put it in a better position to enlarge either its Beauty & Personal Care or its Home Care divisions. The latter of these, whose brands include Cif, Comfort, Domestos, Persil and Surf, would make an obvious merger partner for RB Home.

A multitude of competition regulators would undoubtedly have concerns with those two businesses coming together.

However, somewhere in the City, at least one corporate financier will already have put together a spreadsheet showing how the numbers on such a deal could stack up.