The deal is the latest in a flurry of activity in the pharmaceutical space, which has seen a record volume of mergers and acquisitions this year, according to data provider Dealogic.
The German chemical and pharmaceutical company's CEO, Marijn Dekkers, said the acquisition was a major milestone in the group's path towards "global leadership" in the consumer products line.
The company also said it had entered into a strategic global agreement with Merck in the cardiovascular therapy field.
"We're going to look for the best opportunities within that portfolio. I wouldn't say we're finished," said Kenneth Frazier, CEO of Merck, in an interview on Squawk on the Street. "We're going to continue to evaluate opportunities to create value. That's to buy things that will make sense in a value-creating opportunity and to sell things we don't think are core."
Speaking to CNBC's "Squawk Box" right after the deal was announced, Dekkers played downs suggestions that the deal would bring the group tax savings. Instead, he insisted the deal was being driven by growth, as it would enable Bayer to take household U.S. brands and position them outside the U.S.
"It (growth) is a huge part of this transaction, Merck OTC (over the counter business) has some very strong brands particularly in the U.S," said Dekker.
But he added: "It [tax] is a factor because it is an asset deal, we pay around 24 or 25 percent corporate taxes. The difference is not that big, it is certainly not the motivation why we are doing this."
Commenting on the size of the deal, Dekker said they could pay a "very good price" for business - which represents an earnings before interest, taxes, depreciation and amortization (EBITDA) multiple of 21.
"There are lots of synergies and these businesses have tremendous consumer loyalty. A product like (anti-histamine) Claritin, Coppertone those products have great loyalty and provide a very consistent income and cash stream," he said.
The acquisition will give Bayer the global number two position in non-prescription, over-the-counter, products following a spate of recently announced consolidations in the market.
Companies including Reckitt Benckiser, Procter & Gamble and Sanofi are also said to have bid on the business, which include well-known brand names including Claritin allergy medicine and Coppertone sunscreen.
Bayer and Merck also agreed to enter into a strategic pharma collaboration in the area of cardiovascular diseases. Both firms willequally share costs and profitfrom the heart disease drugs and implement a joint development and commercialization strategy.
Merck will make payments to Bayer of up to $2.1 billion comprising an up-front payment of $1 billion and sales milestone payments of up to $1.1 billion related to future collective sales.