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February 11, 2017

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Britain’s Reckitt gobbles US’s Mead Johnson for US$16.6b

Source: AFP | February 11, 2017, Saturday | Print Edition

BRITISH consumer health giant Reckitt Benckiser yesterday gobbled US infant and child nutrition firm Mead Johnson for US$16.6 billion in a takeover which targets rapid growth in Asia.

The friendly deal, worth the equivalent of 15.5 billion euros, was pitched at US$90 per share and will “significantly strengthen” its presence in developing markets like China, Reckitt said in a statement.

The transaction will also take Reckitt, whose brands include Durex condoms and Nurofen painkillers, into the baby food market for the first time.

The deal, which values Illinois-based Mead Johnson at US$17.9 billion including debt, is expected to generate 200 million pounds (US$249 million) of annual cost savings within three years of completion.

“The acquisition of Mead Johnson is a significant step forward in Reckitt Benckiser’s journey as a leader in consumer health,” said CEO Rakesh Kapoor.

He described Mead Johnson’s “Enfa” baby food brands as “a natural extension” to Reckitt’s consumer health portfolio.

Under Kapoor’s leadership, Reckitt has been on the lookout for a major acquisition for some time, and the Mead Johnson takeover will boost its US and Asia business and expand its health division.

The transaction would strengthen the British group’s position in developing markets — which will account for around 40 percent of the combined group’s sales.

Mead Johnson Chairman James Cornelius said the deal would provide “tremendous value” and described Reckitt “with its strong financial base, broad global footprint, consumer branding expertise and dynamic business model (as) an ideal partner.”

Mead Johnson sells 70 products in over 50 countries and regions.

The US company, which booked a net profit of US$545 million in 2016 on sales of US$3.7 billion, generates nearly half its revenues in Asia.

Mead Johnson belonged to Bristol-Myers Squibb until 2009, when its shares were floated on the stock exchange. It has regularly been the focus of takeover speculation, with food giants Danone and Nestle previously tipped as potential buyers.

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