Reckitt seduces Durex maker SSL with 2.54-bln-pnd takeover

21st July 2010, Comments 0 comments

Household goods firm Reckitt Benckiser seduced Durex condom maker SSL with a 2.54-billion-pound takeover on Wednesday, growing its health and personal care business and expanding in China and Russia.

Reckitt said in a statement it had agreed to buy SSL for the equivalent of 3.01 billion euros or 3.9 billion dollars, in a "step change" for the group that already makes Nurofen headache treatments and Vanish stain removers.

"The acquisition of SSL will provide a step change to Reckitt Benckiser's global health and personal care business, which has been a key driver of Reckitt Benckiser's net revenue growth and profit progression," said Reckitt chief executive Bart Becht in an official statement.

"It is anticipated that the acquisition will increase Reckitt Benckiser's health and personal care net revenues by over 36 percent to approximately 2.8 billion pounds, one third of the group's total net revenues."

The deal will bring together SSL's market-leading Durex condoms and Scholl footcare products, with Reckitt's so-called powerbrands that also include Air Wick air fresheners, Dettol surface cleaners and Strepsils throat lozenges.

"The acquisition will add two new Powerbrands, with good further growth potential, to Reckitt Benckiser's current arsenal, making 19 Powerbrands in total," added Becht.

"Durex, in the sexual wellbeing category, is the global number one condom brand and Scholl is the market leader in the footcare category in many of the markets where it is present."

The Anglo-Dutch company has agreed to pay 1,163 pence per share, plus a final shareholder dividend of eight pence per share. The total value is 2.54 billion pounds.

London-listed SSL has operations in 30 countries around the world, and sells products in 100 nations, with 10,000 people employed worldwide.

Reckitt, which is based in Slough, west of London, has a global workforce of 24,900, with operations across 60 countries. It sells products in more than 180 nations across the globe.

The huge deal will enhance the scale and critical mass of Reckitt's business in China and Japan, according to the firm.

Euromonitor analyst Serena Jian said that the group was seeking to grow its powerbrands and expand further into emerging markets.

"Reckitt Benckiser's acquisition of SSL International, illustrates its intent to grow its consumer health and personal care divisions, while continuing the strategy of focusing on its power brands portfolio, to which it will add Durex and Scholl," Jian told AFP.

"The company will also benefit from SSL's expanded presence in China and Russia, sustaining its further growth in emerging markets."

She added that the deal would make Reckitt the second-largest company in the western European medicated skin care market.

"The acquisition will help Reckitt Benckiser to overtake Bayer in medicated skin care in western Europe -- and become the second leading player behind Johnson and Johnson," she noted.

As a result of the deal, Reckitt added that it hoped to generate cost savings of nearly 100 million pounds per year from 2012.

The bid price represents a premium of nearly 33 percent from London-listed SSL's closing share price on Tuesday.

"This offer is some four times the level of SSL's share price five years ago," said SSL chairman Gerald Corbett.

"I believe few shares in investors' portfolios have done as well. Reckitt Benckiser is a well regarded company and I am sure our brands and people will be in good hands."

© 2010 AFP

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