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Reckitt beats Bayer to acquire nutrition company Schiff

Provides springboard to US consumer health market

Schiff Nutrition products

Reckitt Benckiser's $1.4bn bid for Schiff Nutrition has been backed by the US consumer healthcare company's board, all but sealing the deal.

Reckitt's $42-per-share offer trumped an earlier $34-per-share bid from Bayer valuing the firm at around $1.2bn that observers had already described as being generous, given that Schiff's sales were around $250m last year.

Both Reckitt and Bayer saw Schiff as a springboard into the US market, while for Reckitt the deal also represents its first foray into the vitamins, minerals and supplements (VMS) sector.

Bayer publicly retreated from its offer earlier this week, saying it would not be drawn into a bidding war for the business, and will get a $22m break-up fee from Schiff as a result.

Analysts have responded favourably to the Reckitt transaction – despite the high price – and have pointed to the company's track record in successfully acquiring and integrating other consumer healthcare businesses, such as Boots Healthcare, Adams and SSL.

Rakesh Kapoor, Reckitt's chief executive, said: "We are very pleased to have reached a mutually beneficial agreement with Schiff and are excited to enter the $30bn global vitamins, minerals and supplements market with such a strong portfolio of high quality branded business in the USA."

Schiff's key brands include MegaRed for heart care, Move Free for joint health and Airborne immune supplements, and the company has enjoyed strong sales growth this year.

The company reported quarterly revenues of around $85m in September and, at the same time, predicted fiscal 2013 turnover will rise more than 40 per cent to around $370m.

Reckitt's brands include painkiller Nurofen (ibuprofen), Durex condoms and cleaning product Cillit Bang. These helped the company report third-quarter sales of £2.42bn ($3.86bn).

"Schiff's portfolio is an excellent fit with our strategic focus on health and hygiene, where in healthcare in the USA we already have Mucinex, Delsym, Cepacol and Durex as major brands," said Kapoor.

23rd November 2012

From: Sales

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