The irony of a company that makes condoms moving into the baby food market has not been lost on the Twittersphere.
The owners of Durex just bought a company that makes a very different product. https://t.co/TCIdKfbUPE
— Moments UK & Ireland (@UKMoments) February 10, 2017
Reckitt Benckiser Group PLC (LON:RB.) confirmed this morning it would be splashing out US$16.6bn on Mead Johnson Nutrition Co (NYSE:MJN).
It is offering US$90 a share, pushing Mead's shares up 5.2% to US$87.40 in pre-market trading. The shares spiked from US$69.50 to US$84.375 when news of Reckitt's interest first broke at the beginning of this month.
So, is it a good deal?
Hard to swallow
“Durex company now also to make baby food after $16.6 bn deal. What can possibly go wrong?” asks Jitendra Joshi (@jitoshi)
Amusing though the concept is of one end of the business preventing customers for another part of the business, Reckitt says the deal would enhance earnings per share in the first year of ownership.
Liberum says the price being paid is well below what Danone paid for Numico and is more in line with what Nestle paid for Gerber and for Wyeth Nutrition.
Who knew there was so much money in baby food? What's wrong with letting them gnaw on a bit of French bread for hours on end, followed by some mashed up 'nana?
“The acquisition of Mead will transform Reckitt’s operations reducing exposure to low growth and constrained margins at the group's Home division while pushing the group substantially towards faster growing categories with higher margins long-term,” Liberum said.
Some pundits have suggested that Reckitt's management knows nothing about baby food, but Liberum argues “the route to market for baby food and consumer health is similar in many instances and we expect RB would make the most of this for cross selling. Also RB would reduce exposure to developed markets and gain additional bulk in LatAm and China specifically,” it added.
A key takeaway
David Buttress, chief executive of astonishingly successful food delivery company Just Eat PLC (LON:JE.), has had to step down to attend to “urgent family matters”.
The head of online takeaway company Just Eat is to step down due to "urgent family matters" https://t.co/tMWGa2pM6z
— Sky News (@SkyNews) February 10, 2017
We wish Buttress well and hope the matters are not too serious; meanwhile, you can see how highly he was valued by the share price reaction – down more than 6%.
Give the customers what they want is a successful business maxim, but a report in the Telegraph suggests companies like Just Eat (and the companies whose products they deliver) are a bit too successful for the health of the nation.
“Fat children are fuelling the NHS crisis, not the elderly, leading doctor claims,” is the Telegraph headline.
Given the demographic of the Telegraph's readership, it is a headline that is likely to have the collective head of the readership nodding.
Lord McColl of Dulwich, a former surgeon, said "grotesque" changes to the nation's diet were putting needless pressures on health services.
Health officials have pointed to an ageing population as one of the factors putting the National Health Service (NHS) under strain, but with the NHS spending around £10bn on type 2 diabetes every year, unhealthy lifestyles are playing their part.
Not to be too facetious about it, but if people got off their backsides and walked round to the local pizza parlour to collect their carbs fix, rather than using Just Eat's services, they'd probably be less unhealthy.
I wish it could be Christmas everyday
Britain's largest cask ale brewer, pubs group Greene King PLC (LON:GNK) boasted of record takings on Christmas Day in its trading update this morning.
It did very well in the three-week Christmas period, especially in London, but October and November must have been miserable months, because like-for-like sales growth slowed in the final quarter of 2016.
Time, perhaps, for the company to go out, buy another brewery company, close down its brewery and keep the pubs.
That sort of behaviour has made Greene King enemy number one of real ale pressure group CAMRA, but with a craft brewery almost certainly having set up under a railway arch near you in the time it has taken you to read this article, the real ale scene has probably never been healthier.