Reckitt Benckiser considers over $2 billion sale of Mead Johnson Greater China: sources By Reuters

© Reuters. FILE PHOTO: Products produced by Reckitt Benckiser; Vanish, Finish, Dettol and Harpic are seen in London

By Kane Wu

HONG KONG (Reuters) – 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 (NYSE:) 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 and Morgan Stanley declined to comment on the strategic review.

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 (NASDAQ:).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.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link