British consumer health giant Reckitt Benckiser agreed to buy pediatric nutrition manufacture Mead Johnson Nutrition Company MJN for US$16.6 billion.
Reckitt Benckiser, which owns famous power brands like Strepsils, Durex, Lysol, Dettol and many more, plans to add Mead Johnson’s global brands Enfamil and Nutramigen as a new division within the company’s portfolio.
The transaction will also take Reckitt, whose brands include Durex condoms and Nurofen painkillers, into the baby-food market for the first time.
Is the deal strategic fit for both the company?
This deal is win-win for both the company. The successful completion of the integration will lead to medium to long-term growth of 3–5% in global infant and children’s nutrition category of Mead Johnson, which is currently worth approximately $46 billion in annual sales. After an initial transitional period, Reckitt Benckiser expects to perform progressively toward achieving the upper end of this estimated range.
Reckitt Benckiser’s multi-geography supply chain infrastructure and distribution network should enhance Mead Johnson’s go-to-market capabilities. This apart, it will also accelerate Mead Johnson’s entry into new emerging geographies where Reckitt Benckiser already has an existing and deep understanding of local consumer health dynamics.