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Shares in Reckitt Benckiser are up after the consumer goods group confirmed it is in advanced talks to acquire US nutritional products maker Mead Johnson.
On Thursday the pair confirmed discussions, with Reckitt offering to pay $90 per share in cash to buy Mead Johnson, which is based in Illinois. The price is almost a 30 per cent premium on Mead Johnson’s closing share price before news of the talks emerged. From Reckitt’s statement:
RB confirms that it is in advanced negotiations to acquire each Mead Johnson share for $90 in cash, valuing Mead Johnson’s entire share capital at approximately $16.7 billion. The parties are presently engaged in a period of due diligence and contract discussion.
RB presently expects to finance the possible transaction through a combination of cash and debt, whilst retaining a strong investment grade credit rating. There is no certainty that any transaction will ultimately be agreed, nor as to the terms on which any transaction might occur.
Reckitt shares rose 2.85 per cent to £70.39 at the open on Friday.
Mead Johnson had previously been rumoured to be a target of Danone, the world’s largest yoghurt maker. On Thursday shares closed at $69.50, down 1.4 per cent.
In a statement Mead Johnson said:
Mead Johnson notes that no agreement has been completed, and there are no assurances that any transaction will result from these discussions.