Reckitt Sells Mead Johnson China to Primavera Capital for RMB14bn

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Reckitt [RKT:LN] sold the Chinese business unit of Mead Johnson to a private equity (PE) firm, Primavera Capital, for RMB14bn, as reported by Caixin on June 6. Specifically, the business offer includes delivering a Nijmegen-based plant and a Guangzhou-based plant. After the deal, Primavera Capital will hold exclusive use rights of Mead Johnson and its sub-brands in perpetuity. Reckitt will still hold an 8% stake in the relevant business of Mead Johnson China. The transaction is expected to be completed within the second half of 2021.

Mead Johnson ranked first in the Chinese infant nutrition market in terms of sales in 2012, with a 12.3% market share, and the figure dropped to 6.7% in 2016 and 5.1% in 2020. Citing Reckitt CEO in 2019, two years after the company took over Mead Johnson, the opportunities for growth in the short term may be reduced for Mead Johnson as a result of the long-term slowdown in the Chinese milk powder market. According to Reckitt's 2020 financial report, Mead Johnson’s infant nutrition business in China contributed GBP861m of revenue, accounting for 25% of Reckitt's total nutrition business revenues and around 6% of Reckitt's revenue. Notably, before buying out Mead Johnson’s Chinese unit, Primavera Capital had expanded businesses in the consumer goods market. It invested USD410m in Yum China [YUMC:US] in 2016 and participated in the acquisition of a 51% stake in Junlebao in 2019. Moreover, in May 2021, the manager of Primavera Capital, Zuliu Hu, revealed that the PE firm now manages a capital of over RMB100bn.

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