7th Oct 2005 06:00
7 October 2005 ACQUISITION OF BOOTS HEALTHCARE INTERNATIONAL Reckitt Benckiser plc (RB.L) today announced the acquisition of BootsHealthcare International (BHI) from Boots Group PLC for a consideration of ‚£1,926 million in cash.Commenting on the acquisition today, Bart Becht, Chief Executive Officer ofReckitt Benckiser said: -"BHI will substantially strengthen Reckitt Benckiser's global position in bothHealth Care and Personal Care, very attractive businesses as evidenced by thestrong growth rates at good margins at both BHI and Reckitt Benckiser's ownHealth & Personal Care (H&PC) category. Combined H&PC revenues will exceed ‚£1bn, an increase of 90%, and will represent 26% of the enlarged ReckittBenckiser. The growth of strong and trusted brands in H&PC comes amongst otherthings from increasing consumer self-medication for minor ailments encouragedby government seeking to transfer the cost burden of healthcare to theindividual, and from an ageing population."BHI will add 3 Power Brands to Reckitt Benckiser's portfolio; Nurofen inanalgesics; Strepsils in sore throat; and Clearasil in anti-acne. All threebrands are already global leaders and have substantial further growthpotential. To realise that potential, Reckitt Benckiser will continue to investbehind BHI's proven R&D and brand development capabilities and use its owndistribution capabilities to drive growth in new channels and new countries."Substantial synergies will result from the integration of BHI into ReckittBenckiser. Specifically, Reckitt Benckiser targets ‚£75m in cost synergies and ‚£130m in net working capital synergies by 2008. The prospect that the deal istargeted to be immediately earnings enhancing (excluding the ‚£150m one offrestructuring) combined with the growth potential and attractive margin profilemakes this a good acquisition for shareholders."Richard Baker, CEO of Boots Group PLC commented today: -"BHI has performed strongly over the last three years, delivering excellentorganic growth and outperforming its market. I firmly believe that theprospects for the business remain strong and with the commitment and focus thatReckitt Benckiser will bring to the business that it will continue to thrive."There will be a conference call for investors to discuss this announcement at0830hrs UK time today. Dial-in details are 0845 113 0049 for UK participantsand +44 1452 542 303 for international participants. Full details will beposted on the Company's website at www.reckittbenckiser.com. Detail Boots Healthcare International (BHI)BHI is a consumer healthcare business largely selling over the counterproducts. In the year to March 2005, BHI reported net revenues of ‚£523m (+4% on2004) and Operating Profit of ‚£88m (+9% on 2004). At 31st March 2005, BHIreported net assets of ‚£454m. BHI financials will be restated onto ReckittBenckiser policies by February 2006. BHI's product range includes * Nurofen, the No. 1 European and No.2 world wide Ibuprofen brand * Strepsils, No. 1 Global sore throat brand * Clearasil, the No.1 Global brand of anti-acne treatment. * A number of strong local brands such as E 45, Lutsine, Optrex, Nylax, Karvol plus prescription drug business Hermal. BHI operates five manufacturing units, three in Nottingham UK, one in Reinbeknear Hamburg Germany, and one in Bangkok, Thailand. It is the intention ofReckitt Benckiser to continue operations at all three locations.Financial Improvement PotentialThe acquisition of BHI will offer a number of opportunities for financialimprovement under Reckitt Benckiser ownership. * Cost synergies arising from integration of the two businesses are targeted at ‚£75m annually by 2008. * Net working capital at BHI is targeted to reduce by ‚£130m by applying Reckitt Benckiser's established net working capital management disciplines. It is expected that this improvement will be substantially achieved by 2008. * There will be a one-off charge of ‚£150m for the cost of integrating and restructuring post-acquisition. This charge will cover the necessary reorganisation to integrate BHI into Reckitt Benckiser plus some further restructuring of manufacturing configuration in the enlarged Company. Reckitt Benckiser intends to maintain its share buyback program at ‚£300m a yearin 2006.Timetable & IntegrationThe acquisition remains subject to anti-trust approvals in a number ofjurisdictions, notably the EU and US. No material anti-trust issues areexpected. The transaction is also subject to the approval of shareholders ofBoots Group plc.The Board of Reckitt Benckiser plc has been advised by Merrill Lynch.For Further Information Reckitt Benckiser plc Tel +44 (0) 1753 217 800Tom Corran, SVP Investor Relations & Corporate Communications (all calls)Fiona Fong Head of Corporate Communications (press calls)Mark Wilson Corporate Controller & Investor Relations Manager (investor calls)Tim Spratt Financial Dynamics telephone +44 (0) 207 831 3113Notes for EditorsReckitt Benckiser is the world leader in household cleaning, excluding laundry,and has a major presence in health and personal care. The Company is trulyglobal, with over 60 operating companies and close to 50 manufacturingfacilities worldwide and has sales in 180 countries. The Company employs 20,000people around the world. Amongst the Company's leading brands in household areLysol, the world leader in disinfecting cleaning, Calgonit & Finish &Electrasol, the world leaders in automatic dishwashing, Woolite, world leaderin fine fabrics, Vanish & Spray'nWash, world leaders in fabric treatment,Airwick and Mortein, both No.2 brands in air care and pest controlrespectively. In Health & Personal Care (15% of net revenues), leading brandpositions include Veet, the world number one depilatory and Dettol the world'sleading antiseptic, Gaviscon the No.1 gastro intestinal remedy in UK and Lemsipthe UK no.1. in cold/flu remedies.Reckitt Benckiser is headquartered in Slough just outside London and is listedon the London stock exchange. With a market capitalization of c.‚£12.5bn itranks among the top 25 UK listed companies. Reckitt Benckiser had net revenuesof ‚£3.87bn, operating profit of ‚£770m, and net income of ‚£586m in 2004.ENDRECKITT BENCKISER PLCRelated Shares:
RB..L