Reckitt Benckiser Weighs Sale of Baby Formula Unit
(Bloomberg) -- Reckitt Benckiser Group Plc’s reported plan to review its infant nutrition unit and weigh options including a potential sale 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, Bloomberg reported Friday, citing people familiar with the situation. The stock rose as much as 2.4% Monday.
The unit could be worth 5.5 billion pounds to 6.5 billion pounds ($7.5 billion to $8.8 billion), according to an estimate by Barclays analyst Warren Ackerman.
A sale would complete a reversal of Reckitt’s largest-ever purchase, the $17 billion acquisition of Mead Johnson Nutrition Co. made five years ago under former Chief Executive Officer Rakesh Kapoor. His successor, Laxman Narasimhan, sold the Chinese infant formula business to local buyout firm Primavera Capital for $2.2 billion last year, exiting one of its largest markets.
Martin Deboo, an analyst at Jefferies, said it would be a “tough sell” as antitrust issues would probably prevent Nestle SA or Abbott Laboratories from bidding. That would leave Danone, China Feihe Ltd. 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 people said. A representative for Reckitt declined to comment.
The shares traded 0.6% higher at 10:09 a.m. in London, giving the company a market value of about 42 billion pounds.
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