R&C and Benckiser merger held up by red tape

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The Independent Online
THE PLANNED merger between Reckitt & Colman, the UK household products group, and its Dutch rival Benckiser, suffered a setback yesterday following a delay in gaining US regulatory approval for the deal.

Reckitt & Colman, which makes Lysol and Woolite, said yesterday it had extended the closing date of its pounds 2bn purchase of Benckiser B shares, due today, to 17 November. The companies had hoped to complete the deal in the third quarter.

The delay will mean that the pounds 75m in annual pre-tax cost savings that the companies had hoped to generate by the end of 2001 will come on stream later than expected. A Benckiser spokesman said: "Every day we don't complete the merger, we can't realise the benefits it will bring."

The review by the US Federal Trade Commission centres on two non-core cleaning brands that represent about 1.5 per cent of the combined revenues of the enlarged group.

The Benckiser spokesman said he was confident the issue was not a deal breaker. "The deal will go through. It's merely a question of when," he said.

Analysts agree that while the delay is "irritating and frustrating" for the parties involved, it is "not a major issue". The FTC is expected to issue a consent decree in two to five weeks.

The new company, to be called Reckitt Benckiser, will have sales of pounds 3bn and will be the largest maker of household cleaners in the world. The UK company is offering five new shares for each of Benckiser's in a no- premium bid. Reckitt shareholders will hold a 59.1 per cent effective interest in the new company.

Reckitt & Colman has adjourned its EGM, originally scheduled for 1 October, until 19 November. Reckitt shares fell 0.5p to 765p yesterday.