Household products giant Reckitt buys baby formula firm Mead Johnson for $16.6bn

Household products giant Reckitt buys baby formula firm Mead Johnson for $16.6bn

Durex owner Reckitt Benckiser is to acquire US baby formula maker Mead Johnson for 16.6 billion US dollars.

The UK household products giant, which is also behind Cillit Bang and Dettol, said it would pay 90 US dollars per share in cash for Mead Johnson. Including debt, the deal is worth 17.9 billion US dollars.

Reckitt added that the deal is a "significant step" forward in its attempt to become a global leader in consumer health and the tie-up is estimated to result in £200 million in annual cost savings in three years.

Reckitt chief executive Rakesh Kapoor said: "The acquisition of Mead Johnson is a significant step forward in Reckitt Benckiser'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."

Under the leadership of Mr Kapoor, Reckitt has been on the hunt for a major acquisition for some time and the deal with Mead would boost its US and Asia business and help it expand its health division.

Mead makes more than 70 nutritional products in over 50 markets worldwide.

Based in Illinois, Mead Johnson had annual sales of 3.7 billion US dollars in 2016.

The deal still requires shareholder and regulatory approval.

Reckitt made the announcement alongside its full-year results, which saw operating profit rise 8% to £2.4 billion on revenue of £9.9 billion.

Mr Kapoor added: "2016 was a good year in which we achieved broad-based growth and excellent margin expansion, despite challenging markets and an unusual number of issues.

"In 2017, we expect macro conditions to remain challenging, and for a number of existing headwinds to persist in the first half."

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