BY Fraser Tennant
Further enhancing its positioning and growth prospects in China's large infant nutrition market, investment firm Primavera Capital Group is to acquire consumer health, nutrition and hygiene company Reckitt Benckiser’s Mead Johnson business in a transaction valued at $2.2bn.
Under the terms of the definitive agreement, Reckitt will retain a shareholding in Mead Johnson of 8 percent and anticipates net cash proceeds to be approximately $1.3bn. The transaction follows Reckitt’s comprehensive review of its infant formula and child nutrition business in China announced in February 2021.
The deal is another milestone for Primavera in the consumer industry. Going forward, the investment firm intends to support Mead Johnson's growth in China through innovation, operational improvement, channel optimisation and digital transformation, to further enhance its positioning and growth prospects in China’s RMB150bn infant nutrition market.
"We are pleased to acquire the Greater China business of Mead Johnson, a long-established and renowned multinational infant and children nutrition brand,” said Dr Fred Hu, founder and chairman of Primavera Capital Group. “As the controlling shareholder, Primavera is committed to serve tens of millions of Chinese mothers and babies and safeguard their wellbeing.”
Following the completion of the transaction, Primavera will have a royalty-free perpetual and exclusive license of the Mead Johnson brand in Greater China.
“After a thorough review of our infant formula and nutrition business in China, we have found an excellent home for the business under the ownership of Primavera,” said Laxman Narasimhan, chief executive of Reckitt. “As a result of this transaction, Reckitt's Nutrition business going forward will have a better and more consistent growth and margin profile.”
Founded in 1905 in the US, Mead Johnson is a world-renowned premium infant milk formula brand. In 2009, the company successfully listed on the New York Stock Exchange, and in 2017 was acquired by Reckitt .
The transaction is expected to close in the second half of 2021, subject to customary regulatory approvals.
Mr Hu concluded: “We look forward to collaborating with Reckitt management, and to continuing to provide customers the highest-quality nutritional products through world-class scientific innovation and R&D capabilities, as well as the strictest safety and quality control.”
News: Reckitt to sell China baby formula business for $2.2 bln