Reckitt Benckiser Group PLC agreed to buy Mead Johnson Nutrition Co for US$16.6 billion, taking the UK consumer-products maker into the baby-food market for the first time and increasing its presence in Asia.
The maker of Lysol cleaners will pay US$90 a share in cash, it said in a statement yesterday, the same price it indicated when it announced it was holding advanced negotiations on the deal on Feb. 1.
Reckitt Benckiser said it expects ￡200 million (US$250 million) in cost savings by the end of the third year after the purchase.
Photo: Reuters
The deal will add to per-share earnings in first full year and will be “double-digit accretive” by the third year, it said.
Mead Johnson provides a means of stoking growth at Reckitt Benckiser, whose sales are advancing at the slowest pace in more than five years amid tough conditions in Europe and emerging markets like Brazil.
The US maker of Enfamil is to add annual sales of about US$3.7 billion, about half of which comes from Asia.
Mead Johnson shares fell 1.1 percent to US$83.05 in New York trading on Thursday.
Mead Johnson would add baby formula to a portfolio of consumer brands that include Nurofen painkillers, Strepsils throat lozenges and French’s mustard.
The company has proven able to enter and thrive in new categories before, as it did when it acquired Durex condom maker SSL International PLC in 2010. It already has a toe in the nutrition business from its 2012 purchase of Schiff Nutrition Inc, which makes Omega-3 supplements and joint-pain pills.
With a 10 percent share of the baby-food market, Mead Johnson trails Nestle SA and Danone SA globally, though it is second only to Nestle in Asia, the biggest market.
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