Reckitt seeks to sell off its infant formula business         

British consumer goods company's shares are boosted by its review of its baby formula unit — but it may be a 'hard sell'

Competition issues could prevent Nestlé or Abbott Laboratories from bidding for Reckitt's baby formula business. Stock picture

Reckitt Benckiser is reviewing its baby food unit and its is weighing up its options including a potential sale — a move that has boosted the shares of the maker of Lysol.

The British consumer goods company, which sells brands including Enfamil formula, is reviewing the business globally and has been informally gauging buyer interest in the operations. The unit could be worth £5.5bn (€6.6bn) to £6.5bn, according to an estimate by Barclays analyst Warren Ackerman.

A sale would complete a reversal of Reckitt’s largest-ever purchase, the €15bn acquisition of Mead Johnson Nutrition made five years ago under former chief executive Rakesh Kapoor. His successor, Laxman Narasimhan, sold the Chinese infant formula business to local buyout firm Primavera Capital for €2bn last year, exiting one of its largest markets. 

Competition issues could impede sale

Martin Deboo, an analyst at Jefferies, said it would be a “tough sell” as competition issues would probably prevent Nestlé or Abbott Laboratories from bidding. That would leave Danone, China Feihe, and private equity companies as possible contenders.

Breaking up the business and selling off the assets in Asia and the Americas separately would be one way to make a sale more attractive to buyers and palatable to antitrust regulators, Barclays’s Ackerman wrote.

Reckitt’s deliberations are at an early stage, and the company could decide to keep the division, the sources said. Reckitt shares rose in London to value the company at £42bn. 

• Bloomberg