Household products giant Reckitt Benckiser announces multi-billion merger

Reckitt Benckiser has extended its laboratories in Hull, which is the global businesses centre of excellence for research and development of health and personal care products.

The UK household products giant, which is also behind Cillit Bang and Dettol, said it would pay 90 US dollars per share in cash for Mead Johnson. Including debt, the deal is worth 17.9 billion US dollars (£14.3 billion).

Reckitt added that the deal is a “significant step” forward in its attempt to become a global leader in consumer health and the tie-up is estimated to result in £200 million in annual cost savings in three years.

In 2014 Reckitt unveiled its plans for a £100m site that will bring hundreds of jobs to Hull.

Former Chancellor of the Exchequer George Osborne paid a visit to Reckitt Benckiser in Hull to announce major investment in the city.

The firm said the research and development (R&D) site will become “a magnet for talent”.

The £100m Centre for Scientific Excellence, to be based at Dansom Lane, is the largest single investment the business has made to date. It has been supported by a £6m grant from the UK Government Regional Growth Fund.

Reckitt chief executive Rakesh Kapoor said: “The acquisition of Mead Johnson is a significant step forward in Reckitt Benckiser’s journey as a leader in consumer health.

“With the Enfa family of brands, the world’s leading franchise in infant and children’s nutrition, we will provide families with vital nutritional support. This is a natural extension to RB’s consumer health portfolio of Powerbrands which are already trusted by millions of mothers, reinforcing the importance of health and hygiene for their families.”

Under the leadership of Mr Kapoor, Reckitt has been on the hunt for a major acquisition for some time and the deal with Mead would boost its US and Asia business and help it expand its health division.

Mead makes more than 70 nutritional products in over 50 markets worldwide.

Based in Illinois, Mead Johnson had annual sales of 3.7 billion US dollars (£2.9 billion) in 2016.

The deal still requires shareholder and regulatory approval.

Reckitt made the announcement alongside its full-year results, which saw operating profit rise 8% to £2.4 billion on revenue of £9.9 billion.

Mr Kapoor added: “2016 was a good year in which we achieved broad-based growth and excellent margin expansion, despite challenging markets and an unusual number of issues.

“In 2017, we expect macro conditions to remain challenging, and for a number of existing headwinds to persist in the first half.”