Reckitt finalizes deal to buy Mead Johnson for $16.6 billion

Fri Feb 10, 2017 11:19pm EST
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By Martinne Geller

(Reuters) - Reckitt Benckiser (RB.L: Quote) has agreed to buy U.S. baby formula maker Mead Johnson Nutrition (MJN.N: Quote) for $16.6 billion, giving the British consumer goods company a new product line and expanding its presence in developing markets.

Reckitt, the maker of Lysol cleaners, Durex condoms and Mucinex cold medicine, said on Friday it will pay $90 in cash for Mead Johnson shares, a 30 percent premium to their close on Wednesday last week, the day before Reckitt said it was in advanced talks with the maker of Enfamil baby formula.

Including Mead Johnson's debt, the deal is worth $17.9 billion and Reckitt Benckiser said it would finance the acquisition with debt underwritten by Bank of America Merrill Lynch, Deutsche Bank and HSBC.

Reckitt - whose business has been hurt by a safety scandal in South Korea, slowing emerging markets and a "failed" Scholl product - also reported weaker than expected sales in the fourth quarter due to declines in Europe and North America.

The company also forecast 2017 sales growth below some analyst estimates, citing the ongoing impact of those issues and a challenging macroeconomic backdrop.

Reckitt's shares were down 2 percent at 1542 GMT in London, while Mead Johnson was up 5 percent at $87.2 in New York.


Mead Johnson's product Enfamil baby formula are displayed on a store shelf in New York City, U.S., February 10, 2017. REUTERS/Brendan McDermid