Mead Johnson’s Finally in Play: Who Else Might Get in the Game?by
Mead Johnson Nutrition Co. has been a potential takeover target from the day the maker of Enfamil baby food was spun off from Bristol-Myers Squibb Co. in 2009. Reckitt Benckiser Group Plc’s $16.7 billion approach means the U.S. company is finally in play, but who else might be interested? Here’s a look at some of the possible contenders:
- Danone: Long regarded by analysts as the most likely buyer, the yogurt maker needs to close the gap with Nestle in baby food after becoming a distant second when the Swiss food giant bought Pfizer’s Wyeth unit in 2012. But Danone may have too much on its plate right now as it seeks to complete its $10 billion acquisition of organic food maker WhiteWave Foods Co.
- Nestle SA: Mead Johnson would be “easily affordable” and would strengthen Nestle’s baby-food business in China, according to Jefferies analyst Martin Deboo. But overlaps in the U.S. and Mexico would pose “major complications” and invite intense regulatory scrutiny, with any deal likely to be conditional on asset disposals.
- Bright Food Group Co.: “You can never rule out” Asian bidders, Liberum analyst Robert Waldschmidt said, as North American and European food products are perceived as safer by some Chinese consumers. State-owned Bright Food, which is based in Shanghai and makes products ranging from rice wine to ice cream, would stand to gain from a deal as the relaxation of China’s one-child policy increases spending on formula.
- PepsiCo Inc./Coca-Cola Co.: As sugar taxes place increasing pressure on their core soft-drinks business, the beverage giants have sought to build market share in the faster-growing healthful segment through acquisitions such as KeVita Inc., a sparkling probiotic brand Pepsi bought in November, or LA Aloe, a maker of organic aloe-vera water purchased by Coke in June.
- Unilever: While the Dove maker’s recent acquisitions have targeted high-end skincare brands (Ren, Dermalogica) or new business models such as subscription-based Dollar Shave Club, Unilever’s financial firepower and commitment to generate more growth from emerging markets could see it wade into discussions, Liberum’s Waldschmidt said.
- Big Pharma: Johnson & Johnson Co. and GlaxoSmithKline Plc’s joint venture with Novartis AG both make consumer-health products sold over the counter and might want to bulk up in Asia.