Blog Coverage Mead Johnson Confirms Talks with UK’s Reckitt Benckiser

Upcoming AWS Coverage on B&G Foods

LONDON, UK / ACCESSWIRE / February 3, 2017 / Active Wall St. blog coverage looks at the headline from Glenview, Illinois based infant nutrition firm Mead Johnson Nutrition Co. (NYSE: MJN) as the Company announced in a statement to the press on February 01, 2017, that it is in discussions with UK’s consumer goods giant Reckitt Benckiser PLC (RB), to consider RB’s offer. RB has offered to acquire all outstanding shares of Mead Johnson at $90 per share. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

One of Mead Johnson Nutrition’s competitors within the Processed & Packaged Goods space, B&G Foods, Inc. (NYSE: BGS), is estimated to report earnings on February 23, 2017. AWS will be initiating a research report on B&G Foods following the release of its next earnings results.

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Mead Johnson further clarified that the discussions did not guarantee that the deal would be completed. Mead Johnson was not willing to share any other details and said that it would disclose information only once a final decision has been reached, irrespective of the decision being for or against the said proposal.

Mead Johnson is a paediatric nutrition Company that manufactures, distributes, and sells nutritional products for infants, children, expectant and nursing mothers. Its portfolio of products includes the Enfa family of brands, including its flagship brand Enfamil infant formula. It has a portfolio of over 70 different nutrition products which are sold by retailers across 50 countries in Asia, North America, Latin America, and Europe.

Reckitt Benckiser’s comments

The press communication from RB issued on February 02, 2017, is along similar lines as Mead Johnson’s. RB confirmed that the talks to acquire Mead Johnson were at an advanced stage and both companies are currently in the process of completing due diligence and discussing the contract in detail. RB had valued Mead Johnson at $16.7 billion and if the deal goes through, it plans to use a mix of cash in hand and debt to complete the transaction. However, at this time the discussions may or may not lead to a fruitful transaction.

Background

Mead Johnson was spun off from pharma group Bristol-Myers Squibb in 2009. Since then the Company has been seen as a prime target for takeover. It was speculated that Nestle and Danone were in the race to acquire Mead Johnson. Nestle, being its biggest competitor, the merger would have given rise to numerous antitrust issues in US and other markets made it difficult to get approval from the antitrust regulators. Danone is out of the picture till it completes its big-ticket acquisition – The WhiteWave Foods Company, which it acquired in July 2016 for an enterprise value of $12.5 billion.

RB’s move though surprising, it is a good candidate for taking over Mead Johnson. RB has been looking to invest in a suitable business for a long time. It has been looking for new growth opportunities and expanding its global footprint. Mead Johnson in recent years has charted a strong performance in its Asian and Latin American businesses. According to a December 2016 Bloomberg Intelligence report, baby food is likely to be the fastest-growing food category in Asia. The acquisition will help RB boost its business in this region. If the deal goes through, it would be RB’s biggest acquisition till date. It would also be one of the biggest deal by a UK Company to acquire a US based Company.

RB’s portfolio includes popular household brands Lysol, Dettol, Harpic, Air Wick, Cillit Bang, Mucinex, Mortein, Nurofen, Scholl, Strepsils etc. The Company also owns French’s mustard. RB had reported net revenue of £8.87 billion and an operating profit of £2.24 billion for 2015. RB is expected to announce its 2016 results on February 13, 2017.

Stock Performance

Mead Johnson Nutrition’s stock surged 21.41%, closing Thursday’s session at $84.38 on volume of 24.46 million shares. The company’s shares gained 25.07% in the last twelve months. The Company’s shares are trading at a PE ratio of 31.36 and have a dividend yield of 1.96%. At Thursday’s closing price, the stock’s net capitalization stands at $15.59 billion.

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