Reckitt Benckiser (LON: RB), the maker of Lysol products and Durex condoms, has agreed to pay $90 per share in cash for Mead Johnson Nutrition (NYSE: MJN) in a transaction valued at $17.9 billion, including $1.2 billion in net debt as of December 31. The price represents a premium of nearly 30% to Mead Johnson’s closing on February 1 and an EBITDA multiple of 17.4x based on non-GAAP figures for 2016. Mead Johnson (which spun out from Bristol-Myers Squibb in 2009) is slated to become a new division of RB, with its Enfamil and Nutramigen lines of infant and pediatric nutrition products joining the corporation's portfolio of consumer health brands.
RB has built that portfolio out over the last 12 years by acquiring eight companies spread across the B2C and healthcare sectors, according to the PitchBook Platform, all of them makers of personal-care products. The acquisition of MJN is expected to close in 3Q 2017, with RB estimating £200 million in annual cost savings by the end of the third full year. RB's shares dropped roughly 3% on the news to close Friday at 7,047 pence per share, while Mead Johnson ended the week up more than 5% to close at $87.72 per share.