Mead Johnson baby formula is pictured on shelves at a supermarket in Beijing

Picture copyright
Getty Photos

Family items big Reckitt Benckiser has agreed to purchase US child method maker Mead Johnson for $16.6bn (£13.2bn)

The UK-based maker of Durex and Dettol stated the acquisition would assist it develop in China, and supply “a big step ahead” in its efforts to grow to be a “chief in client well being”.

Mead Johnson makes toddler method underneath the Enfa model and had gross sales of $three.7bn in 2016.

The deal is price $17.9bn as soon as Mead Johnson’s debt is taken into consideration.

Mead Johnson chairman James Cornelius stated Reckitt’s provide offered “great worth” to shareholders.

They may obtain $90 per share, 29% greater than its $69.50 share worth on 1 February, earlier than bid hypothesis started.

Why is Asia demanding so much baby formula?

China’s 2015 choice to scrap its one-child policy may very well be a chance for client items corporations.

are actually allowed to have two kids after considerations about China’s ageing inhabitants led the federal government to reverse the decades-long rule.

Final yr, China’s beginning charge was the very best this century, with the variety of newborns rising by 7.9%, or 17.86 million, on 2015.

Because of this child increase, analysts count on demand for meals, method, garments and drugs to develop.

Reckitt Benckiser stated it could fund the acquisition with loans from its banks Financial institution of America Merrill Lynch, Deutsche Financial institution and HSBC, and thru promoting bonds.

The deal will want the approval of shareholders for each corporations and regulators. If Reckitt Benckiser shareholders reject the deal, the corporate can pay Mead Johnson $480m.