Reckitt Benckiser Group PLC is in talks to buy baby formula maker Mead Johnson Nutrition Co for about US$16.7 billion, the latest push by the Durex condom seller to build on its faster growing consumer health business and bolster its presence in Asian markets.
The companies are discussing an offer of US$90 a share in cash, Reckitt Benckiser said on Wednesday. That would represent a 29 percent premium to Mead Johnson’s closing stock price on Wednesday.
Reckitt Benckiser, based in Slough, England, would finance the deal with cash and debt.
Photo: Reuters
Mead Johnson soared 24 percent to US$86 in after-hours trading in the US, while Reckitt Benckiser traded 0.3 percent lower to US$17.47.
The acquisition would let Reckitt Benckiser, valued at US$56 billion, add formula to a portfolio of consumer brands that includes Lysol cleaning products.
CEO Rakesh Kapoor has held off on big deals in the past few years, though he has always been on the lookout, after telling Bloomberg News late in 2015 that he could be interested in Pfizer Inc’s consumer-health unit.
Kapoor has turned more to over-the-counter health products, with brands such as Mucinex and Scholl, for growth, with the home and personal-care divisions expanding more slowly. Hygiene represents about 40 percent of Reckitt Benckiser’s sales, compared with 33 percent for health, according to Bloomberg Intelligence.
Glenview, Illinois-based Mead Johnson trails Nestle SA and Danone SA in the baby food market, though it is second only to Nestle in Asia, the biggest market, according to Bloomberg Intelligence.
Globally, Mead Johnson had a 10 percent share of the baby food market last year, researcher Euromonitor International said.
Mead Johnson confirmed the discussions in a separate statement, and both companies said there is no certainty that any transaction will ultimately be agreed on.
Baby food will likely be one of Asia’s fastest-growing food categories, even as the industry contends with near-term headwinds, Bloomberg Intelligence said in December.
The category’s growth in China might be hurt by smaller baby-food makers slashing prices over the coming year, the note said.
Over the long term, China’s two-child policy will increase spending on formula, while demand in Southeast Asian countries — including Indonesia and Vietnam — will also likely climb as more women enter the workforce, according to Bloomberg Intelligence.
Last year, about half of Mead Johnson’s total sales of US$3.7 billion came from Asia.
The deal would be Reckitt Benckiser’s biggest-ever acquisition, surpassing its purchase of Durex condom maker SSL International PLC for about ￡2.5 billion (US$3.2 billion) in 2010, data compiled by Bloomberg showed.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS