Reckitt Benckiser in talks to buy baby formula maker Mead Johnson for $16.7 bn
02 February 2017
British consumer giant Reckitt Benckiser Group Plc today said that it is in talks to buy baby formula maker Mead Johnson Nutrition Co. for about $16.7 billion (£13.2 billion).
The maker of Dettol, Durex and Strepsils said that it was in advanced negotiations about a deal that would value the US group at $90-a-share.
The $90-a-share offer is nearly 30 per cent premium to Mead Johnson's stock price before The Wall Street Journal reported on the talks yesterday.
The companies ''are presently engaged in a period of due diligence and contract discussion,'' Reckitt Benckiser said in a statement.
Reckitt Benckiser plans to fund the deal through cash and debt.
A successful deal would be Reckitt Benckiser's biggest-ever acquisition, surpassing its 2010 purchase of Durex condom maker SSL International Plc for about £2.5 billion ($3.2 billion), according to data compiled by Bloomberg (See: Reckitt Benckiser to buy out SSL International of Scholl, Durex fame).
Mead Johnson, once majority owned by Bristol-Myers Squibb and spun off in 2009 as an independent company (Bristol-Myers to divest Mead Johnson for $7.69 billion), is a major manufacturer of infant food formula and competes with Danone, Nestle S.A. and Abbott Nutrition among others.
The Illinois-based company makes nutritional products for infants and children and sells its 70-plus products to more than 50 countries and holds a 10 per cent share of the baby food market.
Mead Johnson's Enfamil line of infant food formulas is its popular consumer brand along with fortified beverages for children Sustagen and Lactum and Nutramigen, a nutritional supplement for children with dairy allergies.
The Illinois-based company also markets nutritional supplements for use by pregnant and breastfeeding moms and specialty nutritional products for premature infants and infants with metabolic and digestive disorders.
Mead Johnson has a market cap of $12.90 billion and revenues of $3.7 billion.
With a market cap of $47.8-billion and annual sales of £8.9 billion, Reckitt Benckiser manufactures and distributes a wide range of household, toiletry, pharmaceutical, and food products on a global basis.
The Slough, UK- based company's products include fabric treatments, disinfectant spray and cleaners, dishwashing detergent, personal care, food, and prescription drugs.
It employs over 37,000 people, has operations in 60 countries and sales in some 180 countries.