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Shareholders urge Reckitt to reconsider sale of nutrition company, FT reports
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Shareholders urge Reckitt to reconsider sale of nutrition company, FT reports

(Reuters) – British consumer goods group Reckitt is under pressure from its top shareholders to reconsider a sale of its Mead Johnson Nutrition unit after legal battles and other setbacks in the division, the Financial Times reported on Wednesday.

Reckitt acquired the US baby formula manufacturer Mead Johnson Nutrition in 2017 for $16.6 billion, but is currently trying to overturn a $60 million judgment in a court case. A jury had previously ordered the company to pay compensation to the mother of a premature baby who died of intestinal disease after being fed the baby formula Enfamil.

The company said it faces “contingent liabilities” – a term used for liabilities dependent on future events – from the product liability lawsuit filed in the United States against Mead Johnson.

Portfolio managers at Flossbach von Storch, Reckitt’s third-largest shareholder, and Causeway Capital Management, one of its top 10 shareholders, told the FT they were open to a sale of the unit by Reckitt.

“Nutrition is not a really good strategic fit for us and we would be open to this business unit finding a new owner,” said Simon Jäger, portfolio manager at Flossbach von Storch, according to the FT.

A portfolio manager at Causeway Capital Management told the FT: “Reckitt has identified the nutrition business as a business that does not fit into their future.”

Reckkit, Flossbach von Storch and Causeway Capital Management did not immediately respond to Reuters’ request for comment.

Reckitt shares have fallen about 19% this year.

(Reporting by Devika Nair in Bengaluru; Editing by Sonia Cheema)

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