David Prosser: Another twist to come at SSL?
Thursday 22 July 2010
Outlook Farewell, then, SSL International, the condom-to-footwear combine now being lined up for a sale. Nevertheless, investors should not assume – as many in the market seemed to yesterday – that Reckitt Benckiser's offer for the business is absolutely the last word on the sale process. While SSL recommends the Reckitt offer, other bidders may yet emerge.
Not that this is a bad deal. At a 30 per cent plus premium to the closing price of SSL's shares on Tuesday evening, Reckitt has not been stingy. This is a valuable business that has been going places quickly since putting an accounting scandal behind it a few years ago. Durex is one of very few brands that is so well-established that it is synonymous with its product for many customers around the world. And both it and Scholl have proved to be generally recession-proof.
Above all, however, there is the transformational deal that SSL itself pulled off last year in taking full control of BLBV, the Russian condom business in which it has had a stake for four years. The market has huge potential, both for condoms and for a launch of the Scholl brand.
An attractive asset then, but are there credible rivals to Reckitt for SSL's hand? In short, yes. Merck and Bayer of Germany are possible bidders, according to some City analysts, while Procter & Gamble is a longer shot. Maybe even our own GlaxoSmithKline.
In other words, Reckitt may have received a positive answer to its proposal, but consummation is not yet certain.
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