Consumer goods group Reckitt said it would retain a 30% stake in Essential Home, which makes Air Wick air fresheners, Cillit Bang detergents and Mortein insecticides. Reuters previously exclusively reported that the parties were in talks about a sale, with Reckitt planning to retain a minority stake. Reckitt CEO Chris Licht is seeking to restructure the business and address shareholder concerns about the weakness of the company’s brands in North America and Europe, where consumer confidence remains low.
Reckitt said it plans to return excess capital to shareholders, including through a special dividend of about $2.2 billion and share consolidation after the deal closes.
The Essential Home division provided about 13% of the group’s revenue in the first quarter, but has been facing difficulties for several quarters in a row: in the first three months of the year, sales decreased by 7% compared to the same period last year.
The deal includes up to $1.3 billion tied to the unit’s performance and other financial conditions, the company said, adding that the deal is expected to close by the end of the year. Reckitt, whose brand portfolio includes Dettol hand soap and Durex condoms, is also considering options for its baby food business Mead Johnson, which has been facing lawsuits.
Source: Reuters