Reckitt Benckiser to buy out SSL International of Scholl, Durex fame
22 July 2010
In a move that has come as a surprise to analysts Reckitt Benckiser, yesterday offered £2.54 billion to Scholl shoes group SSL International , to buy out the Durex condoms, with the consumer goods giant looking to expand its health and personal care revenues in the emerging markets of Russia and Asia.
In 1999, Reckitt & Colman and Benckiser merged to become Reckitt Benckiser - the world's No1 household cleaning p[roducts manufacturer.
SSL shares vaulted 33 per cent to 1,177p, above the cash offer price even as speculation grew that a rival bid may emerge. The specialist in household goods Reckitt cited increasing the number of ''power brands'' in its portfolio as the reason for the acquisition. Reckitt boasts 17 ''power brands'' at present including Vanish stain remover, Finish dishwasher powder, Harpic toilet cleaner and disinfectant Dettol.
SSL has also been expanding aggressively in countries such as Russia and has trebled its profits over the last five years while at the same time, extending the breadth of its Durex and Scholl brands into areas including sex toys and insoles for high heels.
According to analysts, the deal signals the return of an appetite for mergers and acquisitions after a hiatus during the economic slowdown. This week alone saw the announcement of two big deals.
Tomkins, the London car parts maker has been offered £2.9 billion by a Candian consortium for a takeover while Reckitt's rival Unilever has agreed to divest its Italian frozen foods business to Birds Eye Iglo, owned by the private equity firm Permira, for €805 million (£685 million).
According to Bart Brecht, Reckitt chief executive, the acquisition of SSL would provide a "step-change" to its global health and personal care business, which has emerged a key driver of the company's net revenue growth and profits increase.