Reckitt Sells 70% of Home Care Business for $48 Billion

Reckitt, a prominent consumer goods conglomerate, has announced the sale of a majority stake in its core home care business, Essential Home, to private equity firm Advent International. The transaction, which includes debt, is valued at 48 billion dollars. Reckitt will retain a 30% stake in the business, which encompasses well-known brands such as Air Wick air fresheners, Cillit Bang cleaners, and Mortein insecticides.

The sale is part of a strategic move by Reckitt's leadership to improve the company's performance and address shareholder concerns about its competitive position in the North American and European markets. These regions have seen relatively weak consumer confidence, and the sale aims to alleviate these concerns. Following the completion of the transaction, Reckitt plans to return excess capital to shareholders, which includes a special dividend of approximately 22 billion dollars and a share consolidation.

The home care business has been a significant contributor to Reckitt's revenue, accounting for about 13% of the company's total revenue in the first quarter of this year. However, the business has underperformed for several consecutive quarters, with sales for the first three months of the year decreasing by 7% compared to the same period last year. The transaction value includes up to 13 billion dollars in performance-based deferred payments, which are linked to the business's performance and other financial conditions. The deal is expected to close by the end of this year.

Reckitt's portfolio also includes other well-known brands such as Dettol hand sanitizers and Durex condoms. The company is currently seeking solutions for its infant formula business, Mead Johnson, which has been embroiled in legal disputes. This strategic move is part of a broader effort to streamline the company's operations and focus on its core strengths, while also addressing the challenges posed by the legal disputes surrounding its infant formula business.