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Reckitt Benckiser secures final approval for $16.6bn acquisition of Mead Johnson

FBR Staff Writer Published 13 June 2017

Reckitt Benckiser’s $16.6bn acquisition of US-based infant formula manufacturer Mead Johnson Nutrition is all set to be closed after securing the final regulatory approval.

Subject to the meeting of customary closing conditions, the transaction is slated to be closed this week.

In February this year, UK consumers goods company Reckitt Benckiser signed an agreement to acquire the Enfa infant formula brand owner Mead Johnson Nutrition.

Reckitt Benckiser, which is the owner of the Dettol brand, offered $90 per share in cash to the stakeholders of Mead Johnson to consolidate its position in the consumer health segment.

After taking the net debt of the infant formula manufacturer into account, the amount paid by Reckitt Benckiser would move up to $17.9bn.

The rationale behind the transaction for Reckitt Benckiser is that it expects the acquisition of Mead Johnson to help its revenues in the consumer health sector boom by about 90% with the combination of the infant and children’s nutrition business of the latter.

Sold worldwide under the Enfa brand, Mead Johnson’s infant formula is lined up to become the biggest Powerbrand in Reckitt Benckiser’s inventory. Also featuring the Enfamil infant formula, the Enfa family of brands accounted to about 80% of the 2015 net sales of Mead Johnson.

The merger of Mead Johnson is likely to be complementary with the geographic footprint of Reckitt Benckiser, expanding its developing markets scale by approximately 65%.

China is expected to be the most important region among developing markets which make up about 40% of the sales of the Reckitt Benckiser- Mead Johnson combination post merger.

In April, it was reported by several British media publications that Reckitt Benckiser was planning to divest its food business to help pay down debt following the amount it will spend to close the Mead Johnson acquisition.


Image: Mead Johnson Pediatric Nutrition Institute in Evansville, Indiana. Photo courtesy of Mead Johnson & Company, LLC.