Reckitt to sell baby milk arm for £1.6bn

CONSUMER goods giant Reckitt Benckiser is selling its baby formula business in China to a private equity firm in a £1.6 billion deal.

The FTSE 100 firm said last night it had struck a deal to offload the China-based infant formula milk arm to Primavera Capital Group, a Beijing-based investment firm.

The deal comes after Reckitt – which owns a catalogue of household brands from Dettol to Durex – kicked off a ‘strategic review’ of its Infant Formula and Child Nutrition (IFCN) business in China in February. The sale includes its manufacturing plants in China and the Netherlands.

Reckitt will keep ownership of the global brands Mead Johnson, a US-based manufacturer of infant formula, and Enfa, which focuses on children’s nutrition.

The deal is due to complete later this year. Reckitt said it will use the sale proceeds to reduce its debt pile.

The sale comes after speculation in recent weeks that rival private equity firms including Carlyle and Yili – one the largest infant nutrition companies in China – were in the running for the infant nutrition business.

Laxman Narasimhan, chief executive of Reckitt, told shareholders in February that the potential sale was the result of a ‘ continually evolving’ market.

Last night he said: ‘We have found an excellent home for the business under the ownership of Primavera. We remain committed to China with our Hygiene, Health and VMS portfolios. We are excited about the opportunities to grow our brands and expand our business.’