A sale would sacrifice JAB’s seat on the Dettol maker’s board as well as dividend payments, Becht, Reckitt Benckiser’s former chief executive officer, said in a phone interview. In May, Luxembourg-based JAB sold 1.2 billion pounds ($1.9 billion) worth of shares, reducing its stake to about 10.5 percent from 15 percent. That sent RB stock down the most in six months.
“We are not keen to go below 10 percent, as we would lose our board seat,” Becht said. “The RB stake generates cash flow for JAB, with its dividends. We are happy with our investment.” Prior to the May sale, JAB hadn’t sold the stock since 2003.
JAB, the investment vehicle of Germany’s billionaire Reimann family, last year made a trio of deals to bolster its presence in the $45 billion global coffee market, acquiring Caribou Coffee Co., Peet’s Coffee & Tea Inc. and a stake in the maker of Douwe Egberts coffee. The moves came after JAB subsidiary Coty Inc. (COTY) unsuccessfully attempted a takeover of door-to-door cosmetics seller Avon Products Inc.
Pablo Zuanic, an analyst at Liberum Research, expects JAB to dispose of its stake in Slough, England-based Reckitt Benckiser sometime after the end of a commitment not to sell any further shares for at least 365 days after the May 2012 sale. Such a move would free up capital to invest in faster-growing sectors of the consumer-products market, he said.
“In my opinion, they will sell the RB stake, on the assumption they want to expand in coffee or in personal care with Coty,” said Zuanic, who recommends selling the stock.
JAB is run by Becht, Peter Harf, who has worked there for more than three decades, and Olivier Goudet, who joined last year. Goudet and Harf once served together on the board of directors of Anheuser-Busch InBev NV (ABI), the world’s biggest brewer. The trio collectively own 8 percent of JAB.
In addition to the coffee holdings, JAB owns 80 percent of Coty, which makes Calvin Klein fragrances, and Labelux Group GmbH, which manages luxury brands Bally, Belstaff and Jimmy Choo. It has about $16 billion in assets.
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