Reckitt sells skincare brand E45 for £ 200million

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Reckitt Benckiser has agreed to sell its E45 skin care brand to Swedish pharmaceutical group Karo Pharma for £ 200million, the latest divestment from the UK consumer group which is looking to focus on higher growth product areas.

The brand’s plan to sell would be another step in its plan to “manage its portfolio for higher growth,” the Slough-based group said on Friday. The range, aimed at consumers with dry and itchy skin, generated combined net sales of £ 43million in December 2020.

The divestiture comes as chief executive Laxman Narasimhan, who took over two years ago, seeks to focus Reckitt’s resources on faster growing categories such as vitamins, sexual health and specialty nutrition.

Reckitt this year sold most of its Chinese infant formula division Mead Johnson for $ 2.2 billion to private equity firm Primavera, but was forced to write off £ 8 billion of its value after acquiring the division for £ 13 billion four years ago.

She also sold her Scholl shoe and orthopedic care brand to Boston-based private equity buyer Yellow Wood.

Reckitt benefited in 2020 from a boom in demand for pandemic-driven hygiene products, such as Dettol and Lysol, but this has lessened recently as Covid-19 vaccines diverted attention from the hygiene and that pressures on commodity costs have intensified.

The group’s shares have fallen by around 4% this year, although it has benefited this winter from a resurgence of colds and flu, which had been suppressed by measures to combat Covid-19. The shares traded at £ 62.88 on Friday morning.

Analysts say the company suffered under former chief executive Rakesh Kapoor from a focus on efficiency rather than investing in its brands and execution.

The sale of E45 is expected to be finalized in the second quarter of next year, subject to consultation with employee representatives in France.

Karo Pharma said the debt-financed purchase, which does not include any factories, will integrate Reckitt providing services and manufacturing support to the Swedish group for a limited period.

The UK-based group previously planned to sell E45 and Scholl, as well as the skin care products of the hair removal brands Veet and Clearasil, as a bundle worth up to $ 1 billion. pounds sterling, but interrupted this process. A person familiar with the situation said this was due to the extent to which the brands were integrated into the rest of Reckitt’s portfolio.

“E45 is an iconic and trusted skin care brand,” said Managing Director Laxman Narasimhan. “As we move from a brand-driven growth strategy to a category-driven growth strategy, we are focusing on high growth categories with brands that we can expand into new places and spaces to support our medium-term growth ambitions. “

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