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Reckitt Benckiser walks away from Pfizer deal

The price tag for Pfizer's consumer healthcare business proved too steep for Reckitt Benckiser
March 23, 2018

Reckitt Benckiser (RB.) is in the process of evolving from a general consumer goods company to a health and hygiene business. This transition could have been expedited by buying Pfizer’s consumer healthcare business, but only for the right price. It turns out the speculated $20bn price tag didn’t match up with management’s acquisition criteria, especially since Reckitt wasn’t interested in buying the whole thing and a partial deal was not an option.

5852p

Chief executive Rakesh Kapoor said Reckitt’s focus will instead be on fuelling organic growth and completing the integration of Mead Johnson. Analysts were optimistic that Reckitt’s “re-accelerating” performance from the fourth quarter in their consumer health business had continued into the first quarter, and that there were plenty of synergies still to be found from the Mead deal and room to expand in health.

While the shares rose on news that Reckitt would walk away from Pfizer, the news was not without some disappointment. Analysts believe the Pfizer business had long been “coveted” by Reckitt management, and entry into the US analgesics market may prove to be difficult otherwise.