Blog: Dean BestReckitt Benckiser clears final Mead Johnson hurdle

Dean Best | 13 June 2017

The final regulatory approval needed for Reckitt Benckiser's takeover of US infant formula maker Mead Johnson has been received, with the US$17.9bn deal set to be completed on Thursday (15 June).

The transaction, announced back in February, has been given the green light by the Ministry of Commerce in China, one of Mead Johnson's major international markets.

Reckitt Benckiser had said it had expected to close the deal in the quarter ending 30 September but the approval from Beijing has brought that date forward.

Thursday will mark the end of Mead Johnson as an independent business, eight years after the Enfamil maker was spun off by pharma group Bristol-Myers Squibb.

Reckitt Benckiser, a consumer goods group with brands from Durex condoms to Flash cleaning bleach in its portfolio, will be hoping Mead Johnson can give its top line a boost. In 2016, Reckitt Benckiser saw its net revenue rise 11%, although that was notably helped by exchange rates. Stripping out forex, revenue increased 2%, with like-for-like growth at 3%.

In the first quarter of 2017, like-for-like net revenue was flat, a performance Jefferies analyst Martin Deboo said was Reckitt Benckiser's weakest showing for 15 years and one that represented the "fifth consecutive quarter of deceleration".

However, Mead Johnson's recent performance has been rocky. In 2016, the US group's sales and profits fell. In the first quarter of this year, Mead Johnson reported a drop in sales but higher earnings, although Deboo noted the company's earnings per share missed analyst forecasts.

In February, a couple of weeks after Mead Johnson and Reckitt Benckiser announced their deal, the formula maker set out an agreement to buy spray drying and finishing capabilities from Australian food group Bega Cheese to strengthen expansion plans for the Chinese market, another indication of the importance it is placing on China.

The takeover of Mead Johnson sees Reckitt Benckiser move one food business in, as it apparently prepares to move another out.

In April, Reckitt Benckiser started a "strategic review" of its existing food division, which includes French's mustard and Frank's RedHot sauce.

The company has not specified what options it is considering but it is likely it is looking to offload the business.

Two weeks ago, Reuters said Reckitt Benckiser had sent out information packages to potential buyers within the industry as part of plans to sell the business.

Why Reckitt Benckiser has moved for Mead Johnson - just-food analysis from February 2017

Which companies could be eyeing up Reckitt Benckiser's condiments? - just-food analysis from April 2017

BLOG

Seeing the palm oil for the trees

Ocado has set up an ‘aisle’ on its website displaying products that do not contain palm oil, in response, the UK online grocer says, to growing interest from consumers in the ingredient....

BLOG

just-food closes for Christmas

Today (21 December) is our last day of reporting before Christmas. We re-open on Wednesday 2 January. Thanks for all your support this year....



Forgot your password?