Reckitt shares rise after Pfizer talks end
The household goods giant had wanted to acquire only part of the Pfizer division.
Shares in Reckitt Benckiser rose to the top of the FTSE 100 on Thursday after the firm announced that it has ended talks to acquire Pfizer’s consumer healthcare business.
The household goods giant, which is behind Durex and Dettol, said that it had wanted to acquire only part of the Pfizer division, which is worth a reported 20 billion US dollars, but this had proved impossible.
Reckitt boss Rakesh Kapoor said: “Our priority remains organic growth, including the completion of the integration of Mead Johnson Nutrition and creating further value from reorganising into two new business units – Health and Hygiene Home.
“We always approach inorganic growth opportunities in a rigorous, disciplined, and financially responsible manner to ensure long-term value creation for shareholders.
“An acquisition for the whole Pfizer consumer health business did not fit our acquisition criteria and an acquisition of part of the business was not possible.”
Shares rallied on the London Stock Exchange, jumping 5% in afternoon trading to 5,916p.
Investors took the news as a signal that Reckitt will begin focusing on reorganising its own business, leaving the path open for new favourite GlaxoSmithKline to pick it up.
Reckitt warned on sales last year after being hit by a cyber attack in June, which significantly disrupted its manufacturing and orders systems across a raft of markets, including the UK.
It has also been undergoing an overhaul to organise the firm into two divisions – its consumer health business, including recently acquired US infant formula company Mead Johnson, and a home and hygiene arm.
Russ Mould, investment director at AJ Bell, said: “Given that the weight of evidence suggests most acquisitions destroy rather than create shareholder value, the market reaction looks very rational.”