LONDON May 31 The sale of Reckitt Benckiser
Group's North American food business, which could fetch
more than $3 billion, has kicked off with information packages
going out to industry players, according to sources familiar
with the matter.
The sale of the food business is aimed at helping the
British consumer goods company pay down debt from its planned
$16.6 billion purchase of Mead Johnson.
Parties that may be interested in the unit, home to French's
mustard and Frank's RedHot sauce, include McCormick,
Conagra Brands, Unilever, Hormel Foods,
Pinnacle Foods and Campbell Soup, according to
the sources, who declined to be identified as the matter is
Reckitt declined to comment, as did Morgan Stanley, which
sources say is advising it.
Conagra, Unilever, Hormel, Pinnacle and Campbell Soup
declined to comment. A spokeswoman for McCormick was not
Reckitt, which also makes Scholl footcare products and
Nurofen tablets, is not courting private equity firms, said the
sources, given the strong initial interest from industry
players, which are usually able to pay more due to synergies
with their existing businesses.
Private equity firms are under pressure to spend the large
piles of cash they have amassed, but the sources said they would
be unlikely to match any bids from the other companies, which
also sell packaged foods.
The business had 411 million pounds ($528 million) of
revenue last year, with like-for-like growth of 5 percent,
according to Reckitt's annual report, which also said the unit's
operating margin shrank by 50 basis points last year to 28.7
percent due to investments aimed at growing it and expanding
internationally, most notably in Canada.
First-round bids are expected in coming weeks, said one of
($1 = 0.7789 pounds)
(Additional reporting by Lauren Hirsch in New York and Pamela
Barbaglia in London; Editing by Mark Potter)