Reckitt Benckiser buys Mead Johnson for $17.9bn in baby formula power play

Household goods giant Reckitt Benckiser has agreed a deal to takeover US baby formula maker Mead Johnson for $17.9bn (£14.4bn). The UK-based maker of Durex and Nurofen said the move was a "significant step forward" in its aim of becoming "a global leader in consumer health".

The deal values Mead Johnson stock at $90 per share, and is a 29% premium on the US firm's closing share price on 1 February, the day before bid speculation began. The value of the transaction also includes Mead's existing debt.

Reckitt chief executive Rakesh Kapoor said the purchase "significantly strengthens our position in developing markets", particularly China.

In 2016, China's birth rate was the highest this century, with the number of newborn babies rising by 7.9%, or 17.86 million compared to 2015.

As a result of this baby boom in China, analysts expect demand for food, formula, clothes and medicine to grow.

Kapoor added that emerging markets will account for 40% of the combined group's sales on completion of the deal, expected at the end of the third quarter of this year.

He said: "We are confident that our culture of consumer centric innovation and our expertise in scaling global brands will deliver significant growth for the Mead Johnson portfolio."

Mead Johnson chairman James Cornelius added: "Relative to the future growth and development of the Mead Johnson business, Reckitt Benckiser - with its strong financial base, broad global footprint, consumer branding expertise and dynamic business model - is an ideal partner."