Reckitt Benckiser is the parent company of various types of products, right from facial scrubs to toilet cleaners. This FTSE 100 consumer goods joint is planning to expand its market reach by acquiring a company catering to infant needs. Mead Johnson Nutrition Co. is the owner of baby milk brands such as Enfamil, Lactum, and Nutramigen. Reckitt Benckiser to acquire this Illinois-based company according to its official statement. This step might be taken by the company as Mead Johnson majorly acquires its revenue from Asia and the U.S. A relatively smaller portion of sales comes from Latin America. By acquiring this company, Reckitt Benckiser will get a hold in the market of these regions as well.
The U.K.-based company announced on Wednesday midnight that it is in advanced takeover talks with Mead Johnson. The company also aims at growing its consumer-health business faster and make its presence felt in the continent of Asia. In order to do so, it has offered a bidding price of $16.7 billion to Mead Johnson for its acquisition. In case the deal materializes, Reckitt Benckiser will close the deal by paying through cash and debt. But the company also clarified that the deal isn’t official yet and might get annulled if the discussions don’t work out.
Reckitt Benckiser to acquire a prominent infant health company
For Reckitt Benckiser to acquire Mead Johnson, both the companies are in talks to finalize the deal at the price of $90 per share in cash. This price is almost 29 percent higher than the closing stock price of Mead Johnson. This deal is also claimed to be the biggest ever deal for Reckitt Benckiser in the form of cash and debt. Along with Reckitt Benckiser, Mead Johnson also confirmed the news in a separate statement. The company further clarified that there is no assurance that the deal will take place.
There were speculations for a while that either Nestlé or Danone might bid for Mead Johnson. Such rumors were out in the market right from the time Mead Johnson went public in 2009. The rumors resurfaced the previous month stating that the company was already considering an offer. One of the logical suitors for the deal, Danone showed its disinterest in the deal last year by buying soya maker White Wave Foods Corp. for $10 billion. On the other hand, Nestlé is facing anti-trust issues as its new CEO just took over last month. This is why the news about Reckitt Benckiser to acquire Mead Johnson might finalize soon.