Reckitt Benckiser considers over $2b sale of Mead Johnson Greater China

FILE PHOTO: Products produced by Reckitt Benckiser; Vanish, Finish, Dettol and Harpic, are seen in London, Britain February 12, 2008. REUTERS/Stephen Hird

British consumer goods company Reckitt Benckiser Group is considering selling its infant formula business in Greater China, in a deal that could value the business at more than $2 billion, two people with knowledge of the matter said.

The group has hired Morgan Stanley to conduct a strategic review of its infant formula unit Mead Johnson in Greater China, the sources said, declining to comment as the information is confidential.

A sale process could start in the second quarter after the bank gets initial feedback from potential buyers, which include both strategic and private equity firms, the sources said.

They however cautioned no decision has been made and that business valuation could change due to the impact of COVID-19.

Reckitt Benckiser did not immediately respond to a request for comment while Morgan Stanley declined to comment.

The group announced the strategic review in February, saying multiple options were being explored.

Its Greater China infant formula business represents 6% of group sales, which were almost 14 billion pounds ($19.8 billion) in 2020, up 11.8% year-on-year, Reckitt Benckiser said at the time.

U.S.-headquartered Mead Johnson, which Reckitt Benckiser bought for $16.6 billion in 2017, runs a range of infant formula brands including Enfamil, Enfapro and Lactum.

Laxman Narasimhan, Reckitt Benckiser’s chief executive, said in February that challenges to the China business included Hong Kong’s longer-than-expected border closure during COVID-19, local competition, a changing regulatory environment and lower birth rates in the country.

Chinese consumers have been favouring imported infant formula since the country’s 2008 baby milk contamination scandal. The top four best-selling infant formula brands on e-commerce platform JD.COM for example are all foreign.

However, local brands are catching up fast with brands such as Morgan Stanley-backed Feihe gaining significant market share.

China imported 335,600 tonnes of infant formula in 2020, down 2.8% year-on-year, according to the Dairy Association of China.

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

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