CONSUMER products and healthcare giant Reckitt Benckiser has trumped Germany’s Bayer and agreed a deal to swallow US vitamin group Schiff Nutrition International with a higher offer of $1.4 billion (£880 million).
The bid, which tops Bayer’s $1.2bn figure, opens up a potential bidding war for Schiff, whose portfolio of vitamins and nutritional supplements including MegaRed for heart care and Move Free for joints.
UK-based Reckitt said it would offer $42 for each Schiff share, a 23.5 per cent premium over the $34 per share that Bayer, Germany’s biggest drugmaker, agreed to pay on 30 October.
Shares in Schiff Nutrition surged nearly 30 per cent and above Reckitt’s offer, indicating some investors expect the bidding to go higher still.
Reckitt’s offer values Schiff at about 3.6 times its forecast 2013 annual sales, which is around the top end of deal multiples in the non-prescription drugs industry.
But it would get Reckitt into the $30bn global market for vitamins and supplements for the first time, complementing its existing strength in other areas of consumer health.
Analyst Andrew Wood at brokerage Bernstein said the deal made good strategic sense for Reckitt.
“This is particularly true given Reckitt’s excellent M&A track record and its ability to quickly extract big synergies from acquired companies,” he said.
Shares in Reckitt closed down 47p at 3,704p.