Home-Cleaner Makers Plan $3.2-Billion Merger
Britain’s Reckitt & Colman said it has agreed to buy Dutch rival Benckiser for about $3.2 billion in stock to create one of the world’s biggest makers of home-cleaning products.
The proposed combination, to be called Reckitt Benckiser, would have sales of nearly $5 billion, with brands ranging from Lysol, Electrasol and Easy-Off to Air Wick air freshener and Calgon water softener.
The companies plan to use their joint market power to get better terms from suppliers and expedite product development to keep up with cost-cutting at Unilever and Procter & Gamble & Co., especially in the U.S.
The merging companies said they expect better growth together and from additional takeovers as they focus on the five product areas where they have leading brand names: household cleaners, fabric treatments, dishwasher detergents, air fresheners and health and personal care products.
The combination is expected to result in annual savings of $45 million by the end of 2001, though initially the integration would bring one-time charges of about $75 million by the end of 2000.
Under the deal, Benckiser shareholders would receive five shares in the new company for each Benckiser share, and Reckitt shareholders traded each of their shares for one share in the new company.
The agreement has been accepted by Germany’s Joh. A. Benckiser, which holds 77.1% of voting rights in Benckiser. Reckitt would own 59.1% of the merged company, and Benckiser holders would own 40.9%. Joh. A. Benckiser would control 24.8% of the voting rights in the combined business.
In February, Benckiser Chief Executive Bart Becht said his company needed a partner to become big enough in the U.S. to reach the level of profitability from its European operations.
Benckiser posted an operating loss from North America last year and broke even in the first quarter of this year. Reckitt saw profit from the region fall 6% last year after being beaten in product development by Clorox Co.’s new shower-cleaning products and new all-purpose cleaning fragrances.
The takeover requires approval by shareholders of both companies and regulators in Europe and the U.S.
