Infant formula world eyes Mead Johnson takeover bid

The infant formula world has taken notice of an announcement from Britain's Reckitt Benckiser that it was in talks to take over America's Mead Johnson Nutrition.

The infant formula world has stood up and taken notice of an announcement from Britain's Reckitt Benckiser that it was in talks to take over America's Mead Johnson Nutrition at US$90 a share - an almost 30 per cent premium to its last traded market price.

"Reckitt Benckiser confirms that it is in advanced negotiations to acquire each Mead Johnson share for $90 in cash, valuing Mead Johnson's entire share capital at approximately US$16.7 billion," Reckitt said in a statement to the London Stock Exchange, issued in response to media speculation.

"The parties are presently engaged in a period of due diligence and contract discussion," it said.

Reckitt said it expects to finance the possible transaction through a combination of cash and debt, while retaining a strong investment grade credit rating.

The company said there was no certainty that the transaction would ultimately be agreed to.

Glenview, Illinois-based Mead Johnson is mainly invovled in infant and child nutrition, with Enfa as its flagship brand. The company has long been rumoured to be a potential takeover target of the French food giant, Danone.

Reckitt Benckiser, a big player in the fast moving consumer goods market, is the company behind Dettol, Durex, Nurofen and Harpic, among other leading brands.

New Zealand has three NZX-listed entities with that are extensively involved in infant formula - Fonterra, Synlait Milk and A2 Milk.