The British consumer goods company, which sells brands including Enfamil formula, is reviewing the business globally and has been informally gauging buyer interest in the operations, according to the people. It could attract offers from private equity firms or rival baby food makers, the people said, asking not to be identified because the information is private.
The biggest UK consumer and health-care companies have been pruning their portfolios more aggressively to fend off activist investors and bolster shareholder value. GlaxoSmithKline Plc is preparing to spin off its consumer health unit, while Unilever Plc sold its tea business to buyout firm CVC Capital Partners and has stoked speculation it could divest food assets.
A sale would complete a reversal of Reckitt’s largest-ever purchase, the $17 billion acquisition of Mead Johnson Nutrition Co. made five years ago under former Chief Executive Officer Rakesh Kapoor. His successor, Laxman Narasimhan, sold the Chinese infant formula business to local buyout firm Primavera Capital for $2.2 billion last year, exiting one of its largest markets.
Reckitt had a 7% share of the global baby food market prior to the sale of its China assets, according to Euromonitor data. Market leader Nestle SA has 19%.
The company said at the time that the remaining operations in North America and other parts of the world had about 5.4 billion pounds ($7.3 billion) of net assets.
Reckitt’s deliberations are at an early stage, and the company could decide to keep the division, the people said. A representative for Reckitt declined to comment.
Shares of Reckitt have fallen about 6.6% over the past 12 months, giving the company a market value of 41.5 billion pounds, as concerns around rising input costs and supply chain constraints have weighed on the stock. The benchmark FTSE 100 Index gained 16% over the period.
Slough, England-based Reckitt reports earnings on Feb. 17.
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