Reckitt shortlists bidders for $2bln Mead Johnson China business -sources

China Mengniu Dairy

14/05/2021 06:04

By Kane Wu
    HONG KONG, May 14 (Reuters) - British consumer goods company
Reckitt Benckiser Group  RKT.L  has shortlisted bidders
including Bain Capital, Carlyle Group  CG.O  and dairy producer
Yili to submit binding offers for its Greater China infant
formula business, sources said.
    The group has hired Morgan Stanley  MS.N  to run an auction
of infant formula unit Mead Johnson in Greater China, in a deal
that could fetch over $2 billion. Morgan Stanley declined to
comment.  urn:newsml:reuters.com:*:nL1N2LK1KD 
    Also on the shortlist are Sequoia Capital China teaming up
with its portfolio company Shijiazhuang Junlebao Dairy Co, and
private equity firm KKR & Co  KKR.N , said the sources, who
declined to be named as the information is confidential. 
    Carlyle is bidding jointly with CITIC Capital, said two of
the people.
    Shortlisted bidders are to submit binding bids by June 11,
said another two of the sources.
    Bain, Carlyle, KKR and Sequoia China declined to comment.
Reckitt, CITIC Capital, Junlebao and Inner Mongolia Yili
Industrial Group  600887.SS  did not immediately respond to
requests for comment. 
    Reckitt's sale of Mead Johnson China comes as the world's
second largest economy this week reported its slowest population
increase since the first modern population survey in the 1950s,
with birth rates declining to the levels seen in ageing
societies like Japan and Italy.  urn:newsml:reuters.com:*:nL1N2MY048
    The exit also follows French dairy giant Danone  DANO.PA 
which sold its 9.8% stake in China Mengniu Diary  2319.HK  this
week for about $1.6 billion euros.  urn:newsml:reuters.com:*:nASN0016YP
    Some investors are wary of how China's demographic shift is
going to impact the infant formula industry, said the sources.
    Hong Kong border closures during the pandemic has also
weighed in on Reckitt's infant formula business, its executives
have said. 
    Reckitt's Greater China infant formula business represents
6% of group sales, which were almost 14 billion pounds ($19.8
billion) in 2020, up 11.8% year-on-year, it said in February.
    U.S.-headquartered Mead Johnson, which Reckitt bought for
$16.6 billion in 2017, runs a range of infant formula brands
including Enfamil, Enfapro and Lactum.

 (Reporting by Kane Wu; Additional reporting by Julie Zhu;
Editing by Sumeet Chatterjee)
 ((kane.wu@thomsonreuters.com; +85228436590; Reuters Messaging:
kane.wu.thomsonreuters.com@reuters.net))