Reckitt Benckiser, the owner of Nurofen painkillers and Dettol cleaning products, is to spin-off its pharmaceuticals business as it focuses on growing its core consumer brands.
The FTSE 100 company said yesterday that a demerger of its RBP unit would take place over the next 12 months with a separate listing on the London Stock Exchange.
However, chief executive Rakesh Kapoor told analysts it had not ruled out a sale of the business and that preparations underway to float the unit were “to a large extent common” with a sale, if a buyer was to emerge.
RBP’s main product is the drug Suboxone used to treat people with addictions to opioids such as heroin.
Sales of the drug have been in steady decline since it lost its exclusive licence in the US in 2009 and was put under strategic review last year.
Analysts have valued the business at around £2.5bn or 350 pence per Reckitt Benckiser share. Estimates previously ranged from £2bn to as high as £6bn due to uncertainty over how many years of profit were left in the business.
The news came as Reckitt reported a 16 per cent rise in first-half operating profits, to just over £1bn. Sale rose by four per cent on a constant-currency basis excluding Suboxone, whose sales fell eight per cent. The drug accounts for seven per cent of revenues.
Jefferies’ Martin Deboo described news of the float as an “anti-climax” following months of speculation, and said he expected more concrete plans from the group. With the process expected to take another year, he described it as “paradise postponed”.
BEHIND THE DEAL
DEUTSCHE BANK | NIGEL MEEK
1 Nigel Meek is chairman of UK Investment banking and joined the German bank when it acquired Morgan Grenfell in 1989.
2 The veteran investment banker acted on AA’s £1.4bn float in June and advised British American Tobacco on a proposed deal that would see Reynolds American buy a majority stake in Lorillard.
3 After graduating from Oxford, Meek was reportedly torn between pursuing a career in the City or becoming an RAF pilot. Although he chose a life in the City, Meek still keeps up his interest in flying.
The US investment bank Morgan Stanley acts as Reckitt Benckiser’s broker alongside Deutsche Bank and is also understood to be advising on the demerger of its pharmaceuticals business. Brunswick is acting as Reckitt’s financial PR advisers.
THE OTHER CORPORATE CARVE-OUTS
CARVED OUT TREASURY WINE ESTATES. LISTED IT IN 2011 AT $2.3BN
DEMERGED ITS HOME & SECURITY BRAND IN 2011
SPUN OFF CADBURY’S AND OREO OWNER MODELEZ IN 2012
DEMERGED TOBACCO FIRM PHILIP MORRIS IN 2008