Mead Johnson Nutrition Company (NYSE:MJN)

Brittany BishopFeb 11, 2017

Reckitt Benckiser, a British company that makes household products including condoms and Lysol, is acquiring USA baby formula maker Mead Johnson for a deal valued at $17.9 billion.

Reckitt said it had "committed" debt financing in place and that it expects to maintain a strong investment grade credit rating. "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", he said.

The deal should add to Reckitt's earnings in the first full year after completion and by the third year it is expected to boost earnings per share by a double-digit percentage, with 200 million pounds of annual cost savings. Susquehanna Bancshares Inc restated a "hold" rating and issued a $90.00 price target on shares of Mead Johnson Nutrition Company in a research report on Wednesday, October 19th. MJN says that it will continue to pay quarterly dividends to shareholders until the deal is complete. Reckitt Benckiser, a FTSE 100 company, said it hoped to complete the deal, which is subject to approval from shareholders and regulators, later this year.

"I don't think you should read too much into the timing", Mr. Kapoor told journalists on conference call, saying Reckitt had been looking at Mead and other companies "for a number of years".

Mead Johnson may terminate the merger agreement where Reckitt Benckiser's board has withdrawn its recommendation in favour of the transaction. Baby food is one of Asia's fastest-growing food products, with demand for instant formula set to increase following China's 2015 decision to end its decades-long one-child policy. Brand, quality and innovation are increasingly important differentiators in the category.

Reckitt Benckiser's products are household names in the United Kingdom and Europe, but its $16 billion takeover of Mead Johnson will allow it to expand its business into Asia. Net income rose 5% to GBP1.83 billion. "For operating margin, we reiterate our medium term target of moderate margin expansion".

RB's consumer health brands include brands such as Nurofen and Strepsils, as well as the more recently acquired vitamin business Schiff. Feltz Wealth PLAN Inc. bought a new stake in shares of Mead Johnson Nutrition Company during the second quarter worth $180,000.

The transaction would strengthen the British group's position in developing markets - which will account for around 40 percent of the combined group's sales.

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