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

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Family items big Reckitt Benckiser has agreed to purchase US child system 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 change into a “chief in shopper well being”.

Mead Johnson makes toddler system below 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 under consideration.

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

They are going to obtain $90 per share, 29% greater than its $69.50 share value 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 could possibly be a chance for shopper items firms.

at the moment are 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 start price was the best this century, with the variety of newborns rising by 7.9%, or 17.86 million, on 2015.

On account of this child increase, analysts count on demand for meals, system, garments and medication 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 firms and regulators. If Reckitt Benckiser shareholders reject the deal, the corporate pays Mead Johnson $480m.