Rumours fly over sale of Reckitt Benckiser

By Simon Pitman

- Last updated on GMT

Related tags Reckitt benckiser

Talk of a multi-billion euro transaction involving Reckitt Benckiser, a global brand owner of personal care and household products, has sent share prices rocketing.

The UK company has been linked to big names such as SSL International, owner of the Durex brand, but according to well-placed sources used by British newspaper The Daily Telegraph, the most obvious candidate is US consumer giant Colgate-Palmolive.

The report stated that Reckitt Benckiser was close to making a cross-border transaction that would probably be structured as a merger if it were to take place with a business such as Colgate-Palmolive.

Such a deal would also tie in with the company’s desire to no longer be headquartered in the UK, due to the unfavourable tax situation and economy.

Exiting the UK market

Back in August Reckitt’s chief executive Bart Becht stated to the British press that the country’s corporate and personal tax situation for was not favourable, while the situation for moving personnel there was ‘challenging'.

The rumours have sent share values rocketing, with share prices on the FTSE index trading up 109 pence at £32.14 at mid-day today.

Reckitt Benckiser has remained tight-lipped about the rumours, refusing to make any comments, but some market analysts have stated that such a deal may not be imminent.

Colgate deal may be difficult to structure

Likewise, other analysts have said that a deal between the Colgate and Reckitt might be difficult to broker because the two have such different business structures.

The company has performed well during the global recession and in the full year 2008 sales rose by 13 per cent at constant exchange rates to £6.56bn, whereas net income rose by 12 per cent to reach £1.14bn.

Key personal care brands held by the company include Veet, Dettol and Clearasil – all of which are global brands that have strong market share in major regions such as Europe, the US, Australasia and Japan.

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