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Reckitt Benckiser confirmed it would acquire US nutrition company Mead Johnson for $90 per share in cash, as the pharmaceuticals group announced 3 per cent drop in operating profit last year.

The UK-based maker of Nurofen painkillers and Durex condoms said the total value of the transaction, which it expects to complete by September, was $17.9bn including Mead Johnson’s net debt, valuing the US company’s equity at $16.6bn.

News of the planned deal first broke last week, when Reckitt confirmed it was in advanced talks with Mead Johnson to pay $90 a share.

Reckitt chief executive Rakesh Kapoor said: “The acquisition of Mead Johnson is a significant step forward in RB’s journey as a leader in consumer health.”

He added:

Mead Johnson’s geographic footprint significantly strengthens our position in developing markets, which will account for approximately 40% of the combined group’s sales, with China becoming our second largest Powermarket.

Confirmation of the deal came as Reckitt released its full-year results for 2016, showing a 3 per cent fall in operating profits at constant exchange rates and without adjusting for exceptional items. With currency effects, operating profit rose 8 per cent to £2.4bn.

Net income fell 5 per cent at constant exchange rates and rose 5 per cent in actual terms, taking currency fluctuations into account, to £1.8bn. Net revenue rose to £9.9bn for the year, up 11 per cent in actual terms and up 2 per cent at constant exchange rates.

“In 2017, we expect macro conditions to remain challenging, and for a number of existing headwinds to persist in the first half. We are targeting LFL net revenue growth of 3 per cent. For operating margin, we reiterate our medium term target of moderate margin expansion,” said Mr Kapoor.

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