Reckitt Benckiser has shortlisted potential bidders for its China infant formula business, including private equity groups and dairy producers.
The British consumer goods group has engaged Morgan Stanley as auction runner to sell its Mead Johnson in Greater China unit, in a deal that could value the subsidiary at more than $2bn, according to a report by Reuters.
Citing company sources, the report said the shortlisted bidders would be expected to submit firm offers by 11 June.
Reuters sources said the bidders were as follows:
- KKR – a New York City-based private equity firm with $252bn in assets under management
- Bain Capital – a US private equity firm with more than $120bn in assets under management
- Carlyle Group – also US private equity with $260bn in assets under management. It was said to be bidding jointly with CITIC Capital, which has $36bn in assets and is a China specialist
- Sequoia Capital China – a Beijing-based venture capitalist, said to be teaming up with Shijiazhuang Junlebao Dairy, one of the companies in its portfolio
- Yili Group – a Chinese dairy products manufacturer based in Hohhot
Reckitt bought the entire Mead Johnson company, headquartered in the US, for $16.6bn in 2017. It produces infant formula brands that include Enfamil, Enfapro and Lactum. The Chinese unit is reported to be worth around 6% of Reckitt’s annual revenue.
Laxman Narasimhan, CEO of Reckitt Benckiser, said at its February full-year results presentation that a strategic review of the infant formula business in Greater China was already under way.
The statement said: “Short-term, restrictions on international movement have impacted cross-border sales, such as those of infant formula between Hong Kong and China.”
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It added that birth rates were slowing in China and that COVID-19 would have a further negative impact on rates as “family planning is put on hold for economic or social reasons”.