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Reckitt Benckiser to acquire Mead Johnson for $16.6bn

FBR Staff Writer Published 10 February 2017

Reckitt Benckiser has agreed to acquire US based infant formula manufacturer and Enfa brand owner Mead Johnson Nutrition for $16.6bn.

Mead Johnson has accepted the British consumer goods maker’s offer for $90 per share in cash which will help Reckitt Benckiser in consumer health segment.

The deal value will go up to $17.9bn after taking Mead Johnson’s net debt into account.

Reckitt Benckiser expects its revenues in the consumer health sector to surge by nearly 90% after combining the infant and children’s nutrition business of Mead Johnson.

The US company’s infant formula sold globally under the Enfa brand is set to become RB’s biggest Powerbrand.

The Enfa family of brands, which accounted to nearly 80% of Mead Johnson’s net sales in 2015, also includes Enfamil infant formula.

Reckitt Benckiser CEO Rakesh Kapoor said: “The acquisition of Mead Johnson is a significant step forward in RB’s journey as a leader in consumer health. With the Enfa family of brands, the world’s leading franchise in infant and children’s nutrition, we will provide families with vital nutritional support.

“This is a natural extension to RB’s consumer health portfolio of Powerbrands which are already trusted by millions of mothers, reinforcing the importance of health and hygiene for their families.”

Mead Johnson’s acquisition is expected to complement the geographic presence of Reckitt Benckiser, growing its developing markets scale by nearly 65%.

China is likely to be the key geography among developing markets which account for nearly 40% of the sales of the combined entity after the merger.

Further, the merger is to accelerate Mead Johnson’s foray into new markets by leveraging on the retail scale and whitespace expertise of its new parent company.

Mead Johnson board chairman James Cornelius said: “First and foremost, this transaction provides tremendous value to Mead Johnson Nutrition stockholders.

“Additionally, relative to the future growth and development of the Mead Johnson business, Reckitt Benckiser – with its strong financial base, broad global footprint, consumer branding expertise and dynamic business model – is an ideal partner.”

While the boards of the two companies have approved the merger deal, it awaits approval from their shareholders. The deal is expected to be closed by the end of the third quarter, subject to regulatory approvals.

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