Reckitt Benckiser
WHAT a difference a couple of years makes. Back then, SSL was trading at 400-500p and Reckitt was said to be sniffing around. Its shareholders will wish it made its move then: its hefty £1,171p per share offer – equivalent to 18 times forecast ebitda in the year to March 2011 – is going to prove costly. That said, the strategic fit is clear. The pair can combine their sales forces and distribution networks, merge product portfolios and eke out £100m of cost synergies, according to Reckitt.
Reckitt is also keen to act before two key SSL products come to market. The CSD500, a condom that helps men stay erect, and Vivagel, a female gel that reduces the chance of sexually transmitted infections, are set to be blockbuster products.
With the household goods market getting more competitive, Reckitt would do well to shift more of its focus onto health and personal care. This deal would split its business 50/50 between the two categories. It had better hope a counter bidder stays away.