The companies are discussing an offer of $90 per share in cash, Reckitt Benckiser said on Wednesday. That would represent a 29 percent premium to the stock's closing price of Mead Johnson Thursday. Reckitt Benckiser, based in Slough, England, will finance the deal with cash and debt.
Mead Johnson increased 24 percent to $86 in trading post closure in the United States, while Reckitt Benckiser traded 0.3 percent lower to $17.47.
Reckitt Benckiser will let the acquisition, valued at $56 billion, adding a formula to a portfolio of consumer brands, which include Lysol cleanser. Chief Executive Officer Rakesh Kapoor has held on big deals in the last few years, although he has always searched for Bloomberg News, having said at the end of the year 2015 that he could be interested in the consumer-health unit of Pfizer Inc.
Kapoor turned more health products for over-the-counter, with brands such as Mucinex and Scholl, for growth, home and personal care Division is expanding more slowly. Cleanliness is about 40 percent of Reckitt Benckiser's sales, compared with 33 percent for health, according to Bloomberg's intelligence.
Shares in Glenview, Illinois-based Mead Johnson has fallen about 34 percent from a peak of 2015, hurt in part by the resurgence of interest in breast feeding in China. The company trails Nestle SA and Danone SA in baby food market, even if it is only exceeded by Nestlé in Asia, the largest market, according to Bloomberg's intelligence.
Globally, has a 10 percent market share of Mead Johnson's infant food last year, according to researcher Euromonitor international.
Mead Johnson confirmed the talks in a separate statement, both companies said there is no assurance that a transaction will ultimately agree.
Baby formula
Baby food tends to be one of Asia's fastest growing categories of food, even as the industry contends with a short-term headwind, Bloomberg noted intelligence in December.
Category growth in China could be hurt by the baby food makers cut prices for less in the coming year, according to records. In the long run, a two-child policy in China will increase the cost of formula while demand in Southeast Asian countries including Indonesia and Vietnam also tends to rise as more women into the work force, according to Bloomberg's intelligence.
2016, coming about half of the total sale of Mead Johnson's 3.7 billion from Asia.
The agreement will be the biggest ever acquisition, Reckitt Benckiser beyond its creators play Durex condoms SSL International Plc's purchase of about 2.5 billion pounds ($ 3.2 billion) in 2010, according to data compiled by Bloomberg.
Baby formula has been the sector has drawn global interest acquisitions in recent years.
In 2012, Pfizer sold its business to Nestle infant nutrition for nearly $12 billion. Danone of France by 2015 Dumex infant formula brands sold to a unit of China Mengniu Dairy Co and used results kept confidential to take larger shares in Mengniu's biggest milk producers, the two Asian countries.
Danone is expected to complete the acquisition of the $10 billion organic producer WhiteWave Foods Co., if the horizon label offers meals and snacks for children, in the first quarter. The European Commission gave conditional approval for the deal in December.
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