Reckitt Benckiser Group Plc is one of the major consumer goods producers headquartered in Slough, England. The company is trading its infant formula and child nutrition (IFCN) business in China for a deal value of $2.2 billion. The investment firm Primavera Capital Group that works with portfolio companies for growth, acquired the new business. The private equity firm made investments in more than 50 companies in the technology, financial services, consumer, and healthcare sectors. In 2016, the company joined hands with the Ant group in a $460-million deal of Yum China Holdings plus the investment in short video-streaming giant Bytedance and online wealth platform Lufax Holding.
The seller will hold an 8% stake in the business unit of IFCN China with nearly $1.3 billion cash flows from the deal. The re-measurement of goodwill and intangible assets may lead to a net loss of 2.5 billion pounds ($3.5 billion) by Reckitt. The company had been on the lookout for sale proceeds from March. As the sector is struggling, the company planned to exit.
The company planned the sale strategically, keeping the poor sales and low birth rates under consideration. Although the sales rates were slow, the competition was intense in China by the local brands. As part of the deal, the company sold its manufacturing plants at Nijmegen in Guangzhou, China, and the Netherlands and a royalty-free perpetual and exclusive license of the Mead Johnson and Enfa unit in China. Reckitt will continue the business operation everywhere else for the Mead Johnson and the Enfinitas, Enfamil, and Enfagrow brands. The transaction will realize in 2021.
The British company saw a boost in revenue due to the rise in demand for products related to hygiene and sanitation. The company’s products like Harpic, Lysol, Dettol, and Vanish spurred the sales growth from 11.8 percent to 13.99 billion pounds. The net revenue of Reckitt for the hygiene segment grew by 19.5 percent at 5.81 billion Pounds. The intense penetration by the products in the disinfectant category contributed to the high market share. The volume growth was 9.6 percent in 2020.
The global usage of Dettol and Lysol crossed 300 million households. RB’s Nutrition portfolio stood at 3.28 billion in 2020. Due to the pandemic, the consumer market saw a high demand trend for surface cleansing and disinfectant supplies. The market size of the global surface disinfectant segment was valued at USD 4.54 billion in 2020 and is projected to increase at a compound annual growth rate (CAGR) of 7.7% from 2021 to 2028.