GLOBAL – FMCG giant Reckitt Benckiser is to buy Durex condoms maker SSL for US$3.6 billion.
The offer means that investors in SSL will receive 1,686c for every share, along with the proposed 11.6c per share of SSL’s final dividend of the year ending 31 March 2010.
The offer price and dividend represents roughly a 32.8 per cent premium to the SSL share price as of 20 July, according to Reckitt Benckiser.
Bart Becht, chief executive of the company, said that acquisition of SSL would provide a step change to Reckitt’s global health and personal care business.
Becht forecast that the acquisition would drive up Reckitt’s health and personal care net revenues by more than 36 per cent, to approximately $4 billion.
He also said the addition of Durex, the condom brand, and SSL’s market-leading footcare brand Scholl, will bolster its portfolio of powerbrands from 17 to 19. According to Media‘s Top 1000 brands report published in July 2010, Scholl’s main marklets in Asia are Malaysia and Singapore. The brands ranks 916th out of the 1000 most influential brands in Asia-Pacific.
Becht claimed Reckitt’s “greater distribution strength” and “brand-building capabilities” could help it grow SSL’ s brands, while SSL would help Reckitt grow its presence in China and Japan.
Synergies from the acquisition of SSL are expected to be around $145 million a year by the end of 2012, according to Reckitt.
For the year ending 31 March 2010, SSL reported sales of $1.2 billion and an operating profit of $183 million.
SSL’s two major condom brands are Durex and Contex. Its portfolio of brands also includes the pain-killing treatments Paramol and Cuprofen, headlice treatments such as Full Marks and the paedriatic medicine Medised.
Reckitt recently made headlines in India following a decision to impose pitch fees for its media buying business, where Reckitt is best known for its range of germ killers and insecticides, including brands such as Dettol, Harpic, Vanish and Lizol.
Globally Reckitt’s media business is split between Zenith Optimedia and MPG. Zenith handles the account in China following its appointment in March this year.
It is understood that Euro RSCG handles Reckitt’s creative business in the region.