Family to sell £670m of Reckitt Benckiser shares

Reckitt Benckiser revealed yesterday that the secretive German family behind the Benckiser name planned to raise €1bn (£670m) by slashing its stake in the Anglo-Dutch household goods giant.

The news, which overshadowed a strong rise in the company's full-year profits, unnerved investors, wiping more than £700m off its stock market valuation. Reckitt's shares fell 105p to 940p.

Joh A Benckiser, one of the company's biggest shareholders, said the family-controlled investment arm was selling down its 24 per cent stake to buy out one family member. Morgan Stanley is handling the placing, which is open to institutional investors.

Following the placing, the Reinmann family, which is descended from the founder Johann Benckiser, will own about 15 per cent of Reckitt. The Reinmanns became major shareholders in the new group after the merger of their 180-year-old business with Britain's Reckitt & Colman in 1999.

Colin Day, Reckitt's finance director, said the stake sale was for "liquidity reasons" and represented JAB Investments' strategic goal of "diversifying and rebalancing its investment portfolio and reducing its borrowings". Mr Day said the Reinmann family were committed shareholders, adding that they had promised not to sell any further shares for at least 12 months. One of the two JAB-appointed directors will step down from the Reckitt board once the placing is completed, Mr Day added.

Reckitt, which spans products such as Vanish stain remover, Finish/Calgonit dishwasher products and Air Wick air-fresheners, reported a 22 per cent rise in underlying profits for 2002 and a 7 per cent rise in underlying sales, beating analysts' expectations. On a pre-tax basis, profits rose 9 per cent to £545m while total net revenues rose 3 per cent to £3.5bn.

Bart Becht, the chief executive, said the growth was driven by a strong innovation programme, which saw the launch of 50 revamped versions of its products in France alone. Mr Becht, who took the helm after the 1999 merger, has revived the group by cutting costs and focusing on 15 "power brands".

Mr Becht defended the company's decision not to announce a share buyback programme, as some analysts had expected, on the grounds that he would still prefer to reinvest the money in the company.