The UK consumer giant is currently eyeing the US-based baby food manufacturer for $US90 per share, nearly a 30 per cent premium.
Mead Johnson said there are no final agreement and no assurances that any transaction will result from their ongoing discussions. No official statements will be further released from the company until the final decision.
“Reckitt Benckiser’s talks with Mead Johnson over a possible takeover is one that will spur debate amongst the big milk formula players and is bound to get its fair share of counter offers. The likes of Nestlé and Abbott Laboratories Inc are possible contenders while Danone has no choice but to watch its competitors close in as its recent acquisition of WhiteWave makes this baby too big to swallow,” said Lianne van den Boss, senior food analyst of Euromonitor International.
Mead Johnson said they continuously remain committed to doing what is best for their shareholders, employees, children, families and health care professionals around the world — who trust and depend on their products and expertise.
“While Nestlé will be bound to divestures in the US with combined shares getting close to the 50 per cent threshold, in China a takeover will create a very big distance between Danone, Abbott and Yili. With China expected to drive half of global growth in milk formula in the next five years, this is a battle worth fighting and a solid reason why a company with hardly any stake in packaged food would want to venture out,” said van den Boss.
Meanwhile, A2 Milk shares lead, up 3.9 per cent to $2.38, continuing Thursday’s gains as the report came in on the ongoing discussions between Reckitt Benckiser and Mead Johnson.
“It’s an interesting sector, there’s a whole bunch of companies that move depending on what the others do,” said Greg Easton, an adviser at Craigs Investment Partners. “We’re also seeing other exporters up today, there’s a bit of weakness in the dollar possibly giving them a wee lift as well. A2’s an amazingly volatile stock at the best of times.”