Reckitt Benckiser launches counter-offer for Schiff

published 16 November 2012

Slough based consumer goods giant Reckitt Benckiser has launched a 1.4bn-dollar (882m-pound) counterbid for US nutrition specialist Schiff Nutrition International, with the tender offer beginning today.

At $44 per share that constitutes 27% more than German conglomerate Bayer's own £693m ($1.1bn) offer announced last month and a 24% premium over the closing price of Schiff's shares last night.

Shares of Schiff finished yesterday's session at $33.92 dollars, but at one point rose as high as $44.19 in after-hours trading, which may indicate that some thought another offer from Bayer was still possible.

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While by some accounts Reckitt Benckiser has a good track-record as regards its acquisitions, yesterday's offer price implied paying what at first glance is a rather lofty 5.41 times 2012 sales and 3.74 times the sales forecast for the year ending in May 2013.

However, although the US outfit's revenues are expected to increase sharply in the year ended in May 2013 (to $374.33m from $251.65m), according to the consensus estimates compiled by FactSet Schiff's sales growth rate is expected to slow down in the year afterwards, with revenues seen rising to $415.97m.

Nevertheless, the company enjoys very respectable gross margins, of approximately 46%, which are far better than the 37% sector average.

In any case, shares of Schiff would now seem to be rather fully valued.

At 08:47 shares of Reckitt are falling by 20p to 3,731p.

--More to follow--

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