Reckitt Benckiser Group has finalized an agreement with Advent International to divest its Essential Home business for up to $4.8 billion, while retaining a 30% stake in the company. This aligns with Reckitt’s July 2024 strategic plan to focus on 11 high-growth Powerbrands.
Key points include:
- Valuation: Essential Home is valued at up to $4.8 billion, or 7.7 times its unaudited adjusted operating profit for the year ending March 31, 2025.
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Contingent Consideration: The deal includes up to $1.3 billion in contingent and deferred payments.
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One-off Costs: Reckitt expects around $0.8 billion in cash taxes and separation costs, payable in 2026.
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Shareholder Return: Excess capital will lead to a special dividend of about $2.2 billion and ongoing share buybacks.
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Completion: The transaction is expected to close by December 31, 2025, pending regulatory approvals.
The Essential Home business generated approximately £2 billion in revenue in 2024 and includes brands such as Air Wick and Woolite, along with the transfer of six manufacturing plants. Completion of the deal hinges on finalizing the separation process and obtaining necessary approvals.
KEY QUOTES:
“We are executing our strategic plan at pace. The divestment of Essential Home represents a significant step forward in unlocking the substantial value in our business. This moves Reckitt towards becoming a simpler, more effective world-class consumer health and hygiene company and it will enable us to focus on a core portfolio of high-growth, high-margin Powerbrands. Essential Home will benefit from Advent’s new majority ownership with our retained minority stake in Essential Home providing a potential long-term value enhancement opportunity for Reckitt.”
Kris Licht, Reckitt Chief Executive Officer
“We are delighted to partner with Reckitt and the Essential Home management team. The carve-out represents a unique opportunity to create a focused, scaled platform of globally recognised home care brands that operate in attractive categories with structural growth tailwinds. We are confident we can build on the portfolio’s strong foundations to drive operational excellence and unlock the brands’ full potential. We look forward to working closely with Reckitt and the Essential Home leadership team on this exciting journey.”
Ranjan Sen, Managing Partner, Advent
