Business

Reckitt Benckiser will sell the child formula unit for $ 2.2 billion


Reckitt Benckiser has agreed to sell its baby formula business in China to Primavera, a private equity firm, as it seeks to end its struggle with a stake that has been growing for years.

The deal is worth $ 2.2 billion. The statement said Saturday that the UK-based consumer goods company expects to receive about $ 1.3 billion in cash from the deal, which will be used to pay off debts and retain an 8% stake.

The deal will help Reckitt “rejuvenate growth and create long-term value,” said CEO Laxman Narasimhan in a statement, adding that the group “actively and resolutely manages our portfolio.”

Reckitt entered the baby formula business in 2017 when it bought US baby milk group Mead Son Onson for մլրդ 13bn, part of a push by former chief executive Rakesh Kapoor to transform consumer margins with higher margins. The department manufactures brands such as Enfamil.

However, it has struggled since then, in part due to China’s declining birth rate and local competition.

Last year, Reckitt devalued Mead Son Onson’s acquisition by 5 5 billion, writing off almost a third of its previous book value.

In 2018, the cessation of production in the Dutch business formula factory forced Reckitt to fail to meet customer demand, losing 70 million pounds from the company’s revenue, hitting the price of its shares.

Martin Debu, a Jefferies analyst, said in March that he thought Reckitt shareholders would be “happy to be out.” [of the China baby formula business] at almost any cost. ”

Reckitt expects a net loss of about միլի 2.5 billion from the sale of Primavera, as it measures the unit’s goodwill և intangible assets, he added.

The company’s share of children’s resolutions, in general, in the first quarter of 2021, sales fell by 7.4% compared to the previous year.

Under the deal, Primavera, which has previously invested in Alibaba, Ant Group և ByteDance, will take over control of Reckitt manufacturing plants in Nijmegen, the Netherlands, and Guangzhou, China.

Reckitt still owns the Mead Johnson և Enfa brand, but Primavera will have free royalties in China.

Narasimhan, who took office in 2019, was trying to reverse the performance of Reckitt, who suffered at the end of Kapoor’s tenure.

In the first quarter of this year, similar revenues increased by 4.1%, according to April, as sales of hygiene products such as Lysol disinfectant increased.

Narasimhan said that Reckitt wants to expand its other business in China, its largest market for Durex condoms.

Primavera Founder և President Fred Hoon says the deal will lead to a “strong partnership” with Reckitt.

China’s Guangzhou-based baby formula business employs about 3,000 people, with net income of 1 861 million in December.



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