Reckitt & Colman face further delay to planned Dutch merger

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The Independent Online
RECKITT & COLMAN, the UK-based Dettol to Lemsip group, is today expected to announce a further setback in its plans to merge with Holland's Benckiser, the company that makes Vanish and Calgon.

The companies are expected to extend for a third time the offer period for their merger, which will create the world's largest household products group with a market value of about pounds 5bn, following a prolonged delay in receiving approval for the deal from the American Federal Trade Commission.

David Saltmarsh, Reckitt's company secretary, admitted yesterday: "We probably won't hear in time [to close the pounds 2bn purchase by Reckitt of Benckiser B shares, which had been rescheduled for today] and the likelihood is that we will have to consider deferring."

The extraordinary general meeting to approve the proposed naming of the enlarged group as Reckitt Benckiser, which was due to be held on Friday, is also likely to be delayed.

Under the terms of the merger agreement, the deal is dependent on gaining regulatory approval from both the FTC and the European Union. The EU has already granted its permission for the deal to go through, but the offer will lapse on 31 January if an agreement with the FTC has not been reached.

Mr Saltmarsh stressed that he did not consider the delay to be a deal breaker. He said: "The end of January is a long way off ... This is just a procedure that has to be gone through."

It is understood that the FTC review centres on two Benckiser brands; Scrubfree and Delicare, which together represent about 0.5 per cent of the combined revenues of the enlarged group. Benckiser has already reached an agreement to sell the brands to Church & Dwight, a US firm, in a deal thought to be worth about $55m (pounds 33.95m).

But the terms of a consent decree have yet to be agreed with the FTC.

Reckitt and Benckiser made their original submission to the FTC on 30 July, shortly after the companies announced their intention to merge.

The offer period was originally scheduled to close in August, but was first postponed until 30 September.

On 29 September, the two boards announced that the offer period would be further extended from 30 September to today because the FTC had failed to conclude its review of the merger.

The two companies had hoped to complete the deal in the third quarter.

Reckitt shares yesterday closed up 1p at 731p.