Home Business News RB shake-up sees Durex split from Brasso

RB shake-up sees Durex split from Brasso

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That is the conclusion from the news that consumer goods giant RB, formerly known as Reckitt Benckiser, is reorganising itself into two divisions.

One division, RB Health, takes in heathcare brands including Neurofen, Strepsils, Gaviscon, Clearasil and Dettol, as well as ‘lifestyle’ brands such as Durex, Scholl and Veet.
The second, RB Hygiene Home, will own household products brands such as Air Wick, Finish, Calgon, Mr Sheen, Vanish, Brasso and Cillit Bang.
This is a big shake-up for the UK’s 13th-largest company, which was formed by the 1999 merger between British firm Reckitt & Colman with the Dutch company Benckiser.
With a stock market value of just under £50bn, RB is a vast business that, during the last decade or so, has made a number of shrewd acquisitions of assets that it successfully identified as having good growth prospects – then managed them more aggressively than their existing owners.
These included the old Boots Healthcare business in 2005, which brought in Strepsils and Neurofen; the 2008 acquisition of Adams Healthcare, which brought in Mucinex and the 2010 takeover of SSL, which added Scholl and Durex.
The biggest roll of the dice came when, earlier this year, RB announced it was splashing out $16.7bn for the US baby milk maker Mead Johnson.
Some businesses have been offloaded along the way, including the famous Colman’s mustard brand, but most notably Indivior, a provider of opioids to people seeking to lose their heroin addiction, which was floated off in 2014.
Following the Mead Johnson deal, RB also announced plans to sell its remaining food brands, including the French’s mustard business.
Announcing the move, RB said: “The two business units will together form one RB – a single company devoted to delivering on our mission of creating healthier lives and happier homes.”
Yet this separation of the two businesses will inevitably lead to speculation RB plans to float off its Hygiene Home arm which, accounting for 40% of sales, is the smaller of the two divisions. Adding fuel to this is that Rakesh Kapoor, RB’s chief executive, will be personally heading RB Health.

There is a logic to the reorganisation. Along with other consumer goods giants like Unilever and Procter and Gamble, RB is wrestling both with changing consumer habits and tastes, including disruption from internet start-ups that sell direct to the consumer and competition from supermarket own brands. All at a time when the rising price of commodities like palm oil, a key ingredient, are rising.
A more formal break-up would undoubtedly be welcomed. Investors have started to fret that sales growth has stalled at RB – concerns accentuated today when RB admitted that, during the three months to the end of September, sales were down 1% on the same period on a like-for-like basis.
Analysts had been expecting growth during the quarter. Adding to those worries have been a string of setbacks, including a cyberattack in June this year and an earlier scandal in South Korea involving the sale of a humidifier disinfectant linked to the deaths of more than 100 people.
This has got some shareholders worrying that, given RB’s well-known efficiency, whether it has been ‘running too hot’ or, at the very least, whether it can carry on growing profits further in a climate in which sales growth is flagging and in which it has few obvious cost cuts left to make.
Adding to that unease was the sudden departure, last month, of four of the 10 members of RB’s executive committee.
Demerging Hygiene Home would also fit with what is thought to be Mr Kapoor’s long-held ambition of turning RB into a pure consumer healthcare giant.
Mead Johnson was an obvious step in bulking up in that area and there are other assets likely to be up for sale in the near future, most notably the consumer healthcare divisions of Pfizer, which includes the Advil, Centrum and Chapstick brands.
Merck, another pharma giant, is also thought to be mulling the sale of its consumer healthcare arm, which makes Seven Seas vitamins and Sangobion, the iron supplement. Mr Kapoor insisted today it was too soon to say if RB will bid for either, but is known to be keen. He said integrating either would not be a concern.
But RB will not have the field to itself. Nestle has also expressed an interest in bulking up in consumer healthcare, reasoning that, like RB, it is probably better-placed to distribute and sell such products than the big drug companies, which in most – but not all – cases are seeking to focus on their science and on their more profitable pharmaceutical products.
It promises to be an interesting 18 months or so in the sector.
Source: Sky News