Another private equity name has reportedly emerged as a possible interested bidder in Reckitt Benckiser’s infant formula business.
Clayton Dubilier & Rice, with offices in New York and London, would be among the first bidders for the operations, according to the the wall street journalafter UK-based Reckitt brought the infant formula actives to market in April.
Since then, the Enfamil-branded maker, which also acquired Mead Johnson’s infant formula business in 2017 and sold most of its infant formula business in China last year, has recently made up for a shortfall. supply in the United States.
However, Bloomberg reported that shortages occurring in the United States, spurred by a recall and plant closure by Abbott Laboratories, have “frightened” potential interest in Reckitt’s formulas business.
Citing anonymous sources requesting confidentiality, Bloomberg said only a “small number” of private equity funds followed up on offers, with Clayton Dubilier being “one of the few buyout firms” to submit a non-binding offer.
Other interested private equity players, reported by Bloomberg in April would be Carlyle Group, Blackstone, KKR and Bain Capital. The sale by London-listed Reckitt is expected to raise between $7 billion and $10 billion, according to the publication’s sources and those of WSJ peer.
Reckitt had not responded to Just Food’s request for an update on the proceedings at the time of writing. This post was also sent to Clayton Dubilier’s New York office by the London branch, but calls went unanswered due to a US holiday today (May 30).
Abbott closed its infant formula plant in Sturgis, Michigan, after issuing a recall in February over fears of contamination with Cronobacter sakazakii or Salmonella after four children fell ill, two of whom died. The US company has since said “there is no conclusive evidence to link Abbott’s formulas to these childhood illnesses.”
Faced with a toast last week by a US House oversight committee, Christopher Calamari, president of US nutrition at Abbott, said the facility would reopen the first week of June, but reiterated that he would take six to eight weeks to put the product on the shelf.
In the meantime, Abbott has been shipping formulas from overseas and ramping up production at other factories, while Nestlé-owned Gerber and Reckitt are taking over. President Biden also announced emergency import measures.
GlobalData research suggests that Reckitt was the third largest player in the US market, behind Abbott Laboratories and Nestlé, when measuring sales in 2020. GlobalData figures gave Reckitt a 25.9% market share, with Nestlé 28% and Abbott Laboratories 28.5%. .
Bloomberg said potential bidders for Reckitt’s formula assets are waiting to see how the U.S. situation develops before deciding to proceed with offers.
In 2021, Reckitt’s infant formula business grew revenue by 3% like-for-like. The United States accounts for about half of the revenues.