NEW YORK/LONDON, Fri Nov 16, 2012 – Reckitt Benckiser Group Plc has trumped Bayer AG’s agreed deal to buy Schiff Nutrition International Inc. with a higher offer of $1.4 billion for the U.S. vitamin maker.
The bid, which tops Bayer’s $1.2 billion price, opens up a potential bidding war for Schiff, whose portfolio of vitamins and nutritional supplements, such as MegaRed for heart care and Move Free for joints, is attractive to companies seeking stable sources of growth.
Reckitt, the British consumer products group behind Cillit Bang cleaner and Durex condoms, said late on Thursday it would offer $42 in cash for each Schiff share, a 23.5 percent premium over the $34 per share that Bayer, Germany’s biggest drugmaker, agreed to pay on Oct. 30.
Shares of Schiff Nutrition surged nearly 30 percent to $44 in after-hours trading on the New York Stock Exchange, above Reckitt’s offer and indicating some investors expect the bidding to go higher still.
Reckitt commenced a tender offer on Friday and said it would expire at 9:00 a.m. New York time on Dec. 14, unless extended.
The new offer values Schiff at about 3.6 times its forecast 2013 annual sales, which is around the top end of deal multiples in the non-prescription drugs industry.
But it would get Reckitt into the $30 billion global market for vitamins and supplements for the first time, complementing its existing strength in other areas of consumer health.
“When this offer was made by Bayer – which was a bilateral agreement and not a public auction process – we knew that this was an area we would be very interested in,” Reckitt CEO Rakesh Kapoor told Reuters.
“That’s why we started to work and look at it once again to see whether this would be attractive to our shareholders. Based on our due diligence, we believe it is and that’s why we’ve come up with a strong offer.”