Reckitt to acquire Mead Johnson, lifts FY net income

Reckitt Benckiser is to acquire Mead Johnson Nutrition Company for $90 a share cash, valuing that outfit at $16.6bn. It also posted a rise in FY net income, but warned of macro-economic challenges in H1 2017.

The consumer goods titan said the total value of the Mead Johnson deal was $17.9bn, including that company's net debt.

"The acquisition of Mead Johnson is a significant step forward in Reckitt Benckiser's journey as a leader in consumer health," said CEO Rakesh Kapoor in a statement.

"With the Enfa family of brands, the world's leading franchise in infant and children's nutrition, we will provide families with vital nutritional support."

Kapoor penned the deal as a "natural extension" to Reckitt's consumer health portfolio of Powerbrands.

Turning to Reckitt's FY results, Kapoor said 2016 was a good year in which the company achieved broad-based growth and excellent margin expansion, despite challenging markets and an unusual number of issues.

FY net income was up 5% to £1.8bn on an actual basis, but down 5% in constant currency terms. Net revenue was up 11% to £9.89bn in actual terms, and up 2% at a constant exchange rate.

Like-for-like (LFL) net revenue growth was up 3%.

Directors recommended a final dividend of 95p a share, from 88.7p, taking the total for 2016 to 153.2p, up 10% from 139.0p.

"In 2017, we expect macro conditions to remain challenging, and for a number of existing headwinds to persist in the first half," said Kapoor.

"We remain confident in the strength of our business and choices across Powerbrands and Powermarkets.

"We are targeting LFL net revenue growth of +3%. For operating margin, we reiterate our medium term target of moderate margin expansion."