Deal Reporter
Reckitt Benckiser reaffirms interest in buys despite recent lull
Reckitt Benckiser (LON:RB), the UK-based consumer health & hygiene company, continues to look for acquisition opportunities despite not making any notable buys recently, according to CEO Rakesh Kapoor.
On Friday’s 1Q15 sales and revenue call, Citigroup analyst Toby McCullagh noted that the company had been fairly quiet in terms of M&A and asked if this was due to price or a lack of available assets.
Kapoor said RB had been quiet on the M&A front for around a year, with its last deal the purchase of the K-Y brand. However, he said RB was not in a hurry to make deals and would focus on finding the right opportunity from both a strategy and value-creation perspective.
The CEO noted that the possibilities for acquisitions were helped by the continued fragmented nature of the market, adding that the company had to decide which opportunities to participate in and what value they would offer.
“I don’t believe that the market has dried up. We continue to look at many M&As,” Kapoor said. “I don’t think you should… go away with the idea that somehow the opportunity has dried up just because we haven’t done one for eight months or whatever.”
Previous remarks
On the 4Q14 earnings call in February, CFO Adrian Hennah said the company viewed acquisitions as an important part of its strategy and saw significant opportunities in this area. CEO Kapoor added that the consumer health space remained fragmented, with opportunities existing in this market.
On the February call, Kapoor said RB had made a number of strategic moves in 2014, including the demerger of its specialty pharmaceuticals business Indivior and the separation of its Russian hospital business. He said RB had also expanded its position in the US sexual wellbeing market with its K-Y acquisition.
RB agreed to buy the global rights to intimate lubricants provider K-Y brand in March 2014. The financial terms of the deal were not disclosed.
RB’s portfolio includes 19 ‘Powerbrands’ that represent 71% of net revenues. Its main market segments are health, hygiene and home.
The company has worked with several different financial advisors on deals in recent times, according to the Mergermarket M&A database, including Deutsche Bank, Jefferies and Morgan Stanley on the Indivior separation. Morgan Stanley was also used for the GBP 866m purchase of Utah-based Schiff Nutrition in late 2012, along with Paul, Weiss, Rifkind, Wharton & Garrison on the legal side.
Slaughter and May has been used for a number of RB’s larger acquisitions. The firm is named as RB’s solicitor in the latter’s 2014 annual report. In-country law firms have also been used on occasion.
RB has a market capitalisation of GBP 42.4bn.
