Advent<\/a>, which is expected to close by the end of December, Reckitt plans to return excess capital to shareholders through a $2.2 billion special dividend. The payout will be on top of a share buyback programme that Reckitt has already begun.<\/p>\nThe company will now focus on its core business of 11 power brands, which generate more than 80 per cent of its core \u00a310.3 billion net revenue. They include Finish, Dettol, Durex, Mucinex, Vanish, Veet and Nurofen.<\/p>\n
The group is based in Slough, Berkshire, and formed through the merger of Reckitt & Colman and Benckiser of the Netherlands in 1999. <\/p>\n
The restructuring of its portfolio follows shareholder frustration with the performance of Mead Johnson, acquired for $18 billion in 2017, stake-building last year by the US activist Eminence Capital and the appointment of Sir Jeremy Darroch, the former Sky boss, as chairman.<\/p>\n
Shares in Reckitt closed up 30p, or 0.6 per cent, at \u00a350.12 on Friday, extending gains to about 14 per cent over the past year.<\/p>\n
Analysts at Jefferies told clients that the divestment was \u201cdone but disappointing\u201d.<\/p>\n
\u201cThis hurdle had to be crossed to kick-start the strategic move to be just \u2018core Reckitt\u2019. But the net value of just \u00a33 billion and lack of clean exit, given 30 per cent retained stake, compares to recent press speculation of about \u00a34 billion enterprise value for the asset and hopes of \u00a36 billion at the start of the process. Eyes now on litigation latest.\u201d<\/p>\n
The review of the future of Mead Johnson has been complicated by costly safety litigation in the US, which the company is defending.<\/p>\n
Infant nutrition is next hurdle<\/p>\n
With Reckitt Benckiser having agreed to divest a portfolio of homecare brands sooner than anticipated, attention in the City switches to a more protracted exit from its larger infant nutrition business and to the longer-term prospects of its remaining core health and hygiene brands.<\/p>\n
While the price and structure of the disposal to Advent International underwhelmed analysts, it clears one of a number of hurdles complicating the outlook for the Slough-based FTSE 100 group.<\/p>\n
The next restructuring issue is the future of Mead Johnson, the infant nutrition business that has been under strategic review since July last year. Mead Johnson was acquired for $18 billion in 2017 in a deal more expensive than all of Reckitt\u2019s other deals combined but has proved troublesome.<\/p>\n
Reckitt\u2019s options are limited by the uncertainty from litigation in the United States relating to Mead\u2019s specialised formula Enfamil and to Similac, that of Abbott Laboratories, Reckitt\u2019s New York-listed competitor.<\/p>\n
The companies reject any \u201ccausal link\u201d between their products and necrotising enterocolitis (NEC), a serious bowel disease, and their position has been supported by US health authorities.<\/p>\n
Analysts at Jefferies noted on Friday, following the Advent deal, that a pre-trial hearing for Reckitt\u2019s co-defendant Abbott is scheduled for Monday before a potential landmark case next month.<\/p>\n
\u201cThis litigation needs to be resolved ahead of a then hoped-for sale of nutrition,\u201d Jefferies said, adding: \u201cWho is a viable suitor for that operation remains very unclear.\u201d<\/p>\n
In an attempt to divert investor attention to the prospects for Reckitt\u2019s remaining health and hygiene business, senior executives held a seminar in London in May to showcase \u201ccore Reckitt\u201d and its portfolio of 11 \u201cpower brands\u201d. They include Durex, Vanish and Nurofen.<\/p>\n
Reckitt is targeting like-for-like sales growth of 4 to 5 per cent a year from them.<\/p>\n
Summing up sentiment, analysts at RBC told clients the Advent deal \u201cshould be a boost to management\u2019s credibility, quite a lot of which was resting on successful execution of this deal, and enable investors to focus more closely on the core Reckitt \u2014 although the NEC litigation remains an unwelcome distraction\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"Reckitt Benckiser has agreed to sell a majority stake in a portfolio of homecare brands for up to…\n","protected":false},"author":2,"featured_media":274475,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4316],"tags":[105,4348,16,15],"class_list":{"0":"post-274474","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-healthcare","8":"tag-health","9":"tag-healthcare","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114879419066387254","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/274474","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=274474"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/274474\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/274475"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=274474"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=274474"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=274474"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}