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Industry NewsReckitt Benckiser puts food business on the block

Reckitt Benckiser puts food business on the block

 

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Thursday, April 6, 2017

Consumer goods giant Reckitt Benckiser has put its food business up for sale in an attempt to cut debt in the wake of its US$17.9-billion acquisition of infant formula maker Mead Johnson. 

Reckitt’s food division includes such brands as French’s mustard and Frank’s Red Hot sauce. The U.S.-focused business could fetch as much as US$2.87 billion, according to a Telegraph article.

The decision to sell the food division comes just two months after Reckitt announced its plan to buy Mead Johnson. Analysts said the two deals are connected, raising the potential for Reckitt to inject some capital back into the business in light of the recent slowdown in sales growth at the company, the news report says.

Ben Maitland, analyst at Beaufort Securities, suggested the food division sale could be a way to “placate markets” and raise capital. Reckitt delivered like-for-like sales growth of one per cent in Q4, which Maitland called “the lowest growth rate delivered by RB in a single quarter for many years”.

Food made up less than five per cent of Reckitt’s total revenues and had always been regarded as non-core, the Telegraph article says.

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