(Adds deal details, background on China infant nutrition
business)
By Siddharth Cavale
June 5 (Reuters) - British consumer goods maker Reckitt
Benckiser Group Plc said on Saturday it was 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 Lysol disinfectant and Dettol soap maker will retain an
8% stake in the IFCN China unit and anticipates net cash
proceeds from the sale to be about $1.3 billion, it said in an
emailed statement.
Reckitt expects to incur a net loss of 2.5 billion pounds
($3.5 billion) on the disposal, mainly due to the re-measurement
of goodwill and intangible assets, it said.
Reuters in March reported that the Slough, England-based
company was considering the sale of the business.
The sale closes a strategic review of IFCN China launched in
February as a result of sluggish sales caused by intense
competition from local Chinese baby formula brands and slowing
birth rates in China.
Reckitt executives have also attributed Hong Kong border
closures during the COVID-19 pandemic as weighing on the
business, which it acquired as part of its $16.6 billion
purchase of U.S.-based Mead Johnson in 2017.
In the same sector, French dairy group Danone sold
its 9.8% stake in China Mengniu Diary in May for about
$1.6 billion euros.
Reckitt's Greater China infant formula business represents
6% of group sales, which were almost 14 billion pounds ($19.82
billion) in 2020, up 11.8% year-on-year.
On Saturday, Reckitt said the deal included the sale of its
manufacturing plants at Nijmegen in the Netherlands, and in
Guangzhou, China, and a royalty-free perpetual and exclusive
license of the Mead Johnson and Enfa family of brands in China.
After the deal's close, expected in the second half of 2021,
Reckitt will own and operate the Mead Johnson and the Enfinitas,
Enfamil and Enfagrow brands in the rest of the world.
($1 = 0.7065 pounds)
(Reporting by Siddharth Cavale in Bengaluru
Editing by David Holmes)