Reckkitt will sell its baby formula business in China for $2.2b1 min read
The British consumer goods giant, Reckitt Benckiser Group Plc is selling its infant formula and child nutrition (IFCN) business in China to investment firm Primavera Capital Group for an enterprise value of $2.2 billion. The company will retain 8% stake in the IFCN China with the net sale proceeds reported to be around $1.3 billion.
Reckitt expects to incur a net loss of $3.5 billion on the disposal due to the re-measurement of goodwill and intangible assets.
The company in China has seen slow to no growth in sales due to the severe level of competition from local Chinese baby formula brands and slowing birth rates in China.
Reckitt’s Greater China infant formula business represents 6% of group sales, almost around $19.82 billion in 2020, with 11.8% YoY growth. Reckitt reported the deal included the sale of its manufacturing plants at Nijmegen and Guangzhou in the Netherlands and China respectively and a royalty-free perpetual and exclusive license of the Mead Johnson and Enfa family of brands in China.