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Reckitt Benckiser Group PLC ADR RBGLY

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1-Star Price

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Reckitt Throws in the Towel on IFCN China but We Still See Formula as a Competitively Advantaged Category

Analyst Note

| Philip Gorham, CFA, FRM |

Reckitt has sold a majority stake in its infant nutrition business in China to private equity firm Primavera for an enterprise value of GBP 2.2 billion. Reckitt will retain 8% of the business in China and it will retain the rights to the Enfa family of brands in all other markets, although manufacturing plant in the Netherlands is included in the asset sale. The transaction is not a surprise as management had previously indicated they were reviewing strategic options for the business in China, which has failed to live up to expectations since the acquisition of Mead Johnson. The deal has a very small negative impact to our valuation, but this is immaterial to our GBX 6,800 fair value estimate. We believe there is modest upside to Reckitt's shares.

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Company Profile

Business Description

European firms Reckitt & Coleman and Benckiser combined in 1999 to form Reckitt Benckiser, which recently rebranded to the corporate name Reckitt. The firm's products include a variety of household and personal-care brands, such as Calgon, Lysol, Finish, and Mucinex, many of which have the number-one or -two position in their categories. More recently, Reckitt has repositioned its portfolio, and has entered infant formula through the acquisition of Mead Johnson, expanded its consumer health presence by acquiring SSL International, Schiff Nutrition, and K-Y, and has exited the food industry. The firm operates in 60 countries and sells products in more than 200, generating around 40% of sales from emerging markets.

Contact
103-105 Bath Road
Slough, Berkshire, SL1 3UH, United Kingdom
T +44 1753217800
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Dec 31, 2011
Fiscal Year End Dec 31, 2021
Stock Type —
Employees 38,945

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