Reckitt pays £2.54bn for sandal and condom manufacturer SSL
Published 22/07/2010 | 05:00
BRITISH consumer goods group Reckitt Benckiser has agreed to buy Durex condoms and Scholl sandals maker SSL International for £2.54bn (€3.02bn) to increase its presence in health and personal care.
The maker of Nurofen painkillers and Strepsils and Lemsip cold remedies will pay £11.71 (€13.92) for each SSL share, representing a 33pc premium to Tuesday's closing price. SSL's shares rose just above the recommended offer as investors speculated that a big drugmaker, looking for growth in the over-the-counter sector, might offer more.
Reckitt's health and personal care business has been a key driver of its growth, and the premium being paid for the condom and foot products maker underscores the value attached to key health and consumer brands by large groups looking to diversify.
Reckitt chief executive Bart Becht said the deal should increase the group's health and personal care net revenues by over 36pc to around £2.8bn (€3.33bn), one-third of the group's total revenues.
"The acquisition will add two new power brands, with good further growth potential, to Reckitt Benckiser's current arsenal, making 19 power brands in total," said Mr Becht, who was the best-paid FTSE 100 chief executive last year.
"Durex, in the sexual well-being category, is the global number one condom brand and Scholl is the market leader in the footcare category in many of the markets where it is present."
The deal also provides a step change in the size of its business in China -- where SSL operates the world's largest condom factory in Qingdao -- and Japan, Reckitt said, adding that it saw annual cost synergies of around £100m (€119m) by the end of 2012.
Both companies sell products in the over-the-counter and grocery channels to pharmacies and supermarkets, and analysts have long seen Reckitt as a potential buyer of SSL. The group was rumoured to have been behind an approach in 2003.
SSL's board recommended yesterday's offer, which chairman Gerald Corbett said was four times the level of the company's share price five years ago.
"We felt that a price that is a 64pc premium to the average share price over the last 12 months, and 35 times last year's earnings, was worthy of consideration by our shareholders," he said. (Reuters)