(Bloomberg) -- Reckitt Benckiser Group Plc has started early discussions with some of the potential suitors for its homecare assets, which could fetch more than £6 billion ($7.9 billion) in a deal, according to people familiar with the matter.
The beleaguered consumer giant is working with Morgan Stanley to gauge interest in brands including Airwick air fresheners and Cillit Bang cleaners, the people said. Mostly financial investors as well as some consumer companies have shown interest in the assets, the people said. A formal sale process is likely to kick off within months and be completed in 2025, the people said.
Meanwhile, Goldman Sachs Group Inc. is helping Reckitt on evaluating options for its formula brand Mead Johnson, including a potential sale, according to the people. Deliberations are ongoing and no final decision has been made, said the people, who have asked not to be identified as the information is private
Representatives for Goldman, Morgan Stanley and Reckitt declined to comment.
Shares of Reckitt gained as much as 3.3% on Wednesday in London to their highest level in six months following the Bloomberg News report. They were up 1.4% at 8:56 a.m. local time, giving the company a market value of around £32.4 billion.
Reckitt in July unveiled plans to sell some of the homecare brands that it’s deemed non-core and review options for its infant formula business. The UK-based company wants to focus on “power brands” like Strepsils lozenges, the Mucinex cold remedy, Gaviscon for heartburn and Durex condoms, along with some disinfectants like Harpic, Vanish, Dettol and Lysol that boomed during the pandemic.
The infant formula unit, created by the $17 billion acquisition of Mead Johnson in 2017, has been a tough spot for Reckitt. The company has taken a charge of about £9 billion on the business so far, including the loss from selling the China part of it.
Chief Executive Officer Kris Licht in July acknowledged that the infant formula unit hasn’t always fit naturally within the group. The business has also been fighting a string of state and federal lawsuits in the US. A tornado in Indiana earlier this year damaged one of its warehouses.
Reckitt could draw offers for its non-core homecare brands, which generated £1.9 billion in revenue last year, at a multiple of about three times its sale, according to Bloomberg Intelligence analysts Diana Gomes and Holly Froum. Together with exiting Mead Johnson, it may help the UK firm reinvest for margin gains, they wrote in a note on Tuesday.
--With assistance from Dasha Afanasieva.
(Updates Reckitt share moves in fifth paragraph and analyst comment in the last paragraph.)
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