Reckitt's pounds 5bn Dutch deal sparks bid hopes

RECKITT & COLMAN shares soared yesterday on hopes of a bid battle following the UK household product group's announcement of a pounds 4.86bn merger with Benckiser of Holland. Reckitt's shares closed 12 per cent up at 785p on speculation of a counter-offer.

Unilever, the Persil to Flora group, has been suggested as a likely candidate. The Anglo-Dutch company would not comment, but a spokesman pointed out that in February the firm paid back pounds 5bn to shareholders because it was not considering any acquisitions.

Yesterday's announcement of the planned merger between Reckitt and Benckiser follows a tough year for the UK company. The firm issued a profits warning last autumn following turmoil in emerging markets and destocking by customers. Interim profits halved to pounds 78.3m in the six months to 3 July.

If the deal goes ahead, it will create the world's largest household cleaning company, excluding laundry products. The combined portfolio will contain household names such as Reckitt's Dettol, Harpic and Lemsip and Benckiser's Vanish, Finish and Calgon. The merged company will be called Reckitt Benckiser. If Reckitt accepted a counter takeover proposal, it would stand to pay Benckiser a pounds 30m break-up fee.

The proposed merger will inevitably bring job losses. If employees were reduced at the same rate as costs, redundancies could reach 1,500. Bart Becht, Benckiser's chief executive officer and the proposed CEO of the merged firm, refused to comment in detail but said that the majority of the merger's pounds 120m restructuring cost will be used for redundancy pay- outs.

At a press conference yesterday, Mr Becht outlined the proposed company's strategic drive. He said this would involve focusing on core products in the fabric care, surface care, health and personal care, dishwashing and home care categories to achieve top-line growth. This will mean rationalising what Mr Brecht called "non-strategic, tail-end products" whose profitability has been declining by 15 per cent a year across the two companies.

The Reckitt-Benckiser merger should generate pounds 75m in annual pre-tax cost savings by the end of 2001 after increasing marketing expenditure by a proposed 25 per cent. The savings will result from a reduction in operating fixed costs, especially in markets such as Western Europe and the US, where both Benckiser and Reckitt & Colman have a presence. Reckitt Benckiser will be headquartered in the UK and listed on the London Stock Exchange. The firms hope to complete the deal by the end of September.

The merger transaction will be effected through an exchange of five new Reckitt shares for every Benckiser share. Under the proposed structure, Reckitt shareholders will hold a 59.1 per cent effective interest in the new company.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
Sport
footballBrighton vs Arsenal match report
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us