The votes have been cast, and the results are in. The winner of Merck's (MRK -1.24%) auction of its consumer care business is Bayer (NASDAQOTH: BAYRY).

Bayer's $14 billion offer outbid competitors Reckitt Benckiser, Procter & Gamble, Novartis, and Sanofi for the segment, which includes popular brands including Claritin and Coppertone.

Now that unit has been sold, and a price has been set, investors attention shifts to what Merck will do with its new found wealth. WIll it bump up its dividend? Buy a competitor? Or hoard the cash to offset potential pitfalls?

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Shuffling chairs
The sale of Merck's consumer care business is just one of many ongoing restructurings within the industry. Faced with patent cliff revenue headwinds, drugmakers are unwinding less profitable businesses to shore up their more profitable pharmaceutical business.

Pfizer (PFE -1.32%) has been one of the most active of those jettisoning such businesses. Pfizer's mega-blockbuster cholesterol drug Lipitor lost patent protection in 2011, and that led Pfizer to unload its infant nutrition consumer business to Nestle for nearly $12 billion in 2012 and spin off its animal business into a newly created company, Zoetis, a little more than a year ago. Those moves helped Pfizer amass a cash and long-term investment position north of $46 billion.

Much like Pfizer, Merck could be in an intriguing position soon, too. Merck already had $17 billion in cash exiting 2013 and another $10 billion socked away in long-term investments. Including the money from Bayer, Merck will soon be sitting on nearly $40 billion.

Choices, choices, choices
That opens up a lot opportunities for the company, including bulking up shareholder support by boosting its dividend payout, or issuing a one-time special dividend.

The company -- and investors -- are probably pretty happy with Merck's current healthy dividend of $1.76, which gives it a 3% dividend yield. And while at first blush investors may like the idea of a one-time windfall, it's probably not likely.

After all, Merck is restructuring in part to fuel future growth. Returning a big chunk of its cash to investors won't go far toward advancing the company's pipeline or product lineup. As a result, Merck may consider an acquisition instead.

Pfizer has already made its interest in AstraZeneca (AZN 1.06%) quite public. AstraZeneca has already rebuffed two of Pfizer's offers, including one for $106 billion, yet Pfizer appears undaunted.

Previously, I wondered whether Merck would be a better buyer for AstraZeneca than Pfizer, given that AstraZeneca has a solid diabetes product line that could fit in nicely alongside Merck's blockbuster diabetes drug Januvia, and that AstraZeneca's cancer pipeline dovetails with Merck's own oncology program.

Although a deal for AstraZeneca is a long shot, it wouldn't be shocking to see Merck get more active on the M&A front once the Bayer deal closes.

A lot of biotech companies and drugmakers have compelling products and pipelines that have become much cheaper than they were just two months ago. That could suggest that Merck would be wise to start scouring the market for bargains, particularly in oncology or autoimmune disease.

If it doesn't find any deals, Merck could always decide to stay conservative amid uncertainty.

After all, the company isn't immune to the patent cliff, and it already has a promising pipeline that includes the oncology drug MK-3475 and the SGLT2 diabetes drug ertugliflozin.

MK-3475 is being studied in more than eight trials across 3,000 patients as a potential treatment for skin cancer and non-small-cell lung cancer. Those are huge markets that could make MK-3475 a blockbuster, and the FDA's recent granting of priority review for the drug could mean an approval by October.

Ertugliflozin, which is being co-developed with Pfizer, could also move the profit needle. Johnson & Johnson was the first drugmaker to win FDA approval for an SGLT2 inhibiting diabetes drug, Invokana, but AstraZeneca won approval for its own SGLT2 drug in January.

Industry watchers think SGLT2 drugs could become blockbusters, and Johnson & Johnson's first-quarter results suggest that Invokana is already gaining ground. If those analysts are right about the outlook for SGLT2 drugs, Merck may be content.

Fool-worthy final thoughts
Merck announced a cost-savings plan last fall that includes eliminating 20% of its workforce in a bid to deliver annual savings of $2.5 billion. Merck expects that plan will already save it $1 billion this year.

As a result, Merck's cash flow should exit this year on solid footing. Since the company is already aggressively returning money to shareholders through its cash flow, Merck may not need to rely on the Bayer proceeds to boost its dividend. If that's the case, a moderate dividend increase and a focus on opportunistic acquisitions may serve Merck best. What do you think?