Reckitt Benckiser has topped Bayer’s $1.2bn offer to acquire Schiff Nutrition with its own $1.4bn bid, potentially sparking a bidding war for the consumer health company.
UK-headquartered Reckitt said the $42 per share cash offer is a 23.5 per cent premium to Bayer’s $34 bid and can close “by year end”. Bayer announced its own offer last month, saying that it saw Schiff as a way to accelerate the growth of its consumer health business in the US.
Both companies are offering a hefty amount for Schiff, which sells dietary supplements and vitamins and recorded sales of around $200m last year, and presents shareholders in the US company a tough decision.
On the one hand, Bayer is an established player in nutritional supplement category with products such as its Centrum multivitamin brand which would benefit from Schiff marketing and distribution channels in the US.
On the other, while Reckitt’s offer is higher, the company does not have a strong portfolio in nutritionals, with most of its consumer health business focusing on over-the-counter pharmaceuticals and personal care brands.
The UK firm does however have a good track record in successfully integrating new businesses, including Boots Healthcare in 2008, and a proven track record in the fast-moving consumer good (FMCG) category.
“For Reckitt Benckiser, this acquisition would provide a powerful entryway into the large and rapidly growing $30bn global vitamin, minerals and supplements (VMS) market,” commented the firm’s chief executive Rakesh Kapoor.
“This market would be the largest consumer health care sector in which we operate [and] is an ideal addition to Reckitt Benckiser’s new strategic focus in global health and hygiene,” he added.
In recent weeks Reckitt, has also been linked to a possible purchase of Pfizer’s nutritional business, which was inherited as part of Pfizer’s takeover of Wyeth in 2009. Pfizer’s pre-Wyeth consumer health business was sold to Johnson & Johnson for $16.6bn in 2006, and Reckitt was also rumoured to be interested in that transaction.
Unsurprisingly, Bayer has remained tight-lipped about Reckitt’s move and analysts do not expect it to make a public statement anytime soon on its plans.