Reckitt shortlists bidders for $2 billion Mead Johnson China business – sources

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HONG KONG (Reuters) – British consumer goods company Reckitt Benckiser Group has shortlisted bidders including Bain Capital, Carlyle Group (NASDAQ:CG) and dairy producer Yili to submit binding offers for its Greater China infant formula business, sources said.

The group has hired Morgan Stanley (NYSE:MS) to run an auction of infant formula unit Mead Johnson in Greater China, in a deal that could fetch over $2 billion. Morgan Stanley declined to comment.

Also on the shortlist are Sequoia Capital China teaming up with its portfolio company Shijiazhuang Junlebao Dairy Co, and private equity firm KKR & Co (NYSE:KKR), said the sources, who declined to be named as the information is confidential.

Carlyle is bidding jointly with CITIC Capital, said two of the people.

Shortlisted bidders are to submit binding bids by June 11, said another two of the sources.

Bain, Carlyle, KKR and Sequoia China declined to comment. Reckitt, CITIC Capital, Junlebao and Inner Mongolia Yili Industrial Group did not immediately respond to requests for comment.

Reckitt’s sale of Mead Johnson China comes as the world’s second largest economy this week reported its slowest population increase since the first modern population survey in the 1950s, with birth rates declining to the levels seen in ageing societies like Japan and Italy.

The exit also follows French dairy giant Danone which sold its 9.8% stake in China Mengniu Diary this week for about $1.6 billion euros.

Some investors are wary of how China’s demographic shift is going to impact the infant formula industry, said the sources.

Hong Kong border closures during the pandemic has also weighed in on Reckitt’s infant formula business, its executives have said.

Reckitt’s Greater China infant formula business represents 6% of group sales, which were almost 14 billion pounds ($19.8 billion) in 2020, up 11.8% year-on-year, it said in February.

U.S.-headquartered Mead Johnson, which Reckitt bought for $16.6 billion in 2017, runs a range of infant formula brands including Enfamil, Enfapro and Lactum.