Reckitt To Sell Chinese Infant Formula Business To Primavera Capital For $2.2 Bln

British consumer goods giant Reckitt Benckiser Group plc (RBGPF.PK,RB.L) Monday said it has agreed to sell its Infant Formula and Child Nutrition business in China or IFCN China to Primavera Capital Group for an implied enterprise value of $2.2 billion.

Reckitt will retain an 8 percent stake in IFCN China and anticipates net cash proceeds to be approximately $1.3 billion.

Under the terms of the definitive agreement, the transaction is structured as a sale of the entirety of IFCN China, including the manufacturing plants in Nijmegen, the Netherlands and Guangzhou, China. It includes a royalty-free perpetual and exclusive license of the Mead Johnson and Enfa family of brands in China.

Following completion of the transaction, Reckitt will continue to own the Mead Johnson and Enfa family of brands globally and will operate those brands in the rest of the world.

The sale follows a comprehensive strategic review of IFCN China announced in February 2021.

The transaction is subject to consultation with Reckitt’s works council in the Netherlands, which Reckitt will now initiate. The company will also engage with its other relevant employee unions in relation to the transaction.

Subject to the Netherlands works council consultation and the satisfaction of customary closing conditions, completion is expected in the second half of 2021.

Reckitt expects to incur cash tax costs of around 300 million pounds and transaction and other costs of around 200 million pounds.

The company will sue the net proceeds to reduce net debt.

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