Reckitt Benckiser, the British consumer products group behind Cillit Bang cleaner and Durex condoms, has signed a deal to acquire US group Schiff Nutrition for $1.4 billion, winning an entry into the $30 billion vitamins and nutrition supplements market after beating out Germany’s Bayer.
The deal brings Reckitt a new portfolio including MegaRed for heart care, Move Free for joints and Tiger’s Milk nutrition bars to add to existing over-the-counter (OTC) health products like Gaviscon for heartburn and Strepsils for sore throats.
The OTC healthcare market is an attractive space for consumer companies and prescription drugmakers alike, due to its steady growth, even though medical value of some products has been sometimes disputed.
Schiff’s board approved the previously announced cash tender offer of $42 per share and recommended shareholders tender into the deal, Reckitt said on Wednesday.
The agreement was expected. On Tuesday, Bayer disclosed its decision to capitulate to its rival bidder by not increasing its own offer of $1.2 billion.
Reckitt, which launched its tender offer for Schiff on November 16, reaffirmed that it expected the deal to boost earnings immediately on an adjusted basis. Reckitt is paying a hefty price to enter vitamins and supplements.
Its offer works out at 16.5 times the $85 million of earnings before interest, tax, depreciation and amortization (EBITDA) that Salt Lake City-based Schiff expects to make in the year to May 2013.