Questions Cloud Latest Danone Link To Mead Johnson

Is Danone looking again astatine Mead Johnson? As we settled backmost successful aft Easter, a study successful France suggested Danone has resurrected its liking successful nan infant-formula business, which has been owned since 2017 by UK consumer-goods group Reckitt Benckiser.

French existent affairs publication La Lettre said Danone – location to infant-formula and baby-food brands including Aptamil and Cow & Gate – has hired finance slope Centerview Partners to measurement up its options for a business Reckitt nary longer sees arsenic cardinal to its future.

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Danone, unsurprisingly, refused to beryllium drawn connected nan study erstwhile approached by Just Food, stating it did not “comment connected rumours”.

Reckitt, which describes Enfamil shaper Mead Johnson arsenic “non-core”, did not respond to a petition for remark by nan clip of publication.

It’s important to statement this isn’t nan first clip Danone has been linked to Mead Johnson. Back successful September 2009, nan French food-and-drinks elephantine moved to rebuff a study it had appointed to Lazard to activity connected a bid for nan business.

That study came conscionable weeks earlier US pharma group Bristol-Myers Squibb spun off Mead Johnson arsenic a listed company. During its life arsenic a nationalist business, Mead Johnson was viewed by marketplace observers arsenic a imaginable target for nan likes of Danone and, five years later, it was nan move of Reuters, citing anonymous sources, to study nan Activia shaper had decided to make a move.

Fast-forward to early 2017 and US financial news portal Street Insider was reporting Credit Suisse was advising Nestlé connected a imaginable bid. By nan extremity of nan year, Mead Johnson had moved to Reckitt for a cool $17.9bn.

It’s adjacent to opportunity Mead Johnson has had its troubles nether Reckitt’s guardianship. By October 2019, nan institution was cutting its group-wide income forecast connected nan backmost of “challenging marketplace conditions” successful babe formula, particularly successful China. Four months later, Mead Johnson’s problems sparked a £5bn (then $6.4bn) write-down.

Reports emerged in 2022 that Reckitt was pondering Mead Johnson’s early successful its portfolio and, successful July 2024, nan institution announced a “strategic review” of nan unit. The group’s astir caller yearly results, covering 2025, picture Mead Johnson arsenic “non-core” (the unit’s income inched up 0.4% connected a reported ground but grew 3.8% like-for-like).

Meanwhile, for nan past 2 years, Reckitt and Mead Johnson has faced litigation successful nan US complete claims a premature babe died from nan intestinal illness necrotizing enterocolitis (NEC) aft being fixed Enfamil Premature formula.

In March 2024, Mead Johnson was ordered by a tribunal successful Illinois to pay $60m successful damages, a verdict Reckitt said it would challenge. In November past year, Mead Johnson and infant-formula rival Abbott was cleared by a tribunal successful Missouri complete claims their products origin NEC.

However, Reckitt and Mead Johnson are facing 2 authorities tests – 1 successful Missouri successful June and different successful Nevada successful November 2027 – and a national proceedings successful July. The institution has denied nan “material allegations” of nan claims.

A class-action securities fraud suit was besides revenge successful New York successful June past twelvemonth alleging Reckitt grounded to pass investors astir nan consequence immoderate infants could processing NEC aft consuming its cow’s milk-based formula. Reckitt says it will besides “vigorously take sides against these allegations”.

This is nan backdrop against which manufacture watchers person been assessing nan latest study to propose Danone is considering a move for Mead Johnson to further grow its beingness successful babe formula.

“While nan fresh has immoderate logic, nan litigation risk, valuation uncertainty and EPS accretion stay cardinal mobility marks,” Barclays expert Warren Ackerman wrote successful a statement to clients.

Danone is 1 of nan world’s largest infant-formula suppliers. The company’s infant-formula business, which besides markets brands including Nutrilon and Bledina, makes up 60% of nan group’s Specialized Nutrition division, which besides takes successful big nutrition and aesculapian nutrition for patients.

The Specialized Nutrition section saw its like-for-like income turn much than 7% successful 2025, pinch Danone CEO Antoine de Saint-Affrique citing “strong demand” for infant-milk look and aesculapian nutrition. Speaking to analysts successful February, de Saint-Affrique said Danone’s infant-formula business saw “strong momentum” successful China, and a ”remarkable performance” successful India and Southeast Asia.

A move for Mead Johnson would principally bolster Danone’s infant-milk business successful different portion of nan globe. it will beryllium a awesome acquisition for Danone. “It will make a batch of consciousness owed to nan truth that it will beryllium a bully opportunity to proceed building nan US level of nan Danone group,” Pierre Tegner, an equity expert covering Danone for French financial-services group Oddo, tells Just Food. “It will thief Danone connected to person a amended equilibrium successful position of geographical vulnerability betwixt Asia/China, Europe and North America. There is simply a request to beryllium a spot much balanced betwixt these 3 building blocks.”

Investors person go a small wary astir babe look much broadly successful nan opening months of 2026 amid nan world callback of products by companies including Danone complete concerns astir nan toxin cereulide.

But Ackerman says nan “underlying class outlook is still beardown for Danone”, adding: “Mead is simply a cardinal competitor, and an acquisition would materially fortify Danone’s position successful nan US and complement its existing world footprint successful Latin America and Asia Pacific.”

However, Mead Johnson’s capacity nether Reckitt’s ownership, nan ineligible unreality hanging complete nan business successful nan US and, much widely, nan imaginable of changes to regulations governing nan infant-formula assemblage successful nan state whitethorn springiness immoderate investors nutrient for thought.

“It will beryllium a bully opportunity for Danone to reinvigorate an plus that has not been very good managed,” Tegner says. “The biggest mobility is really overmuch Mead Johnson has been surgery because it was not a well-managed plus earlier Reckitt did nan acquisition and since nan acquisition by Reckitt 10 years ago. I deliberation nan cardinal mobility for Danone beyond nan value and nan timing [of immoderate deal] is nan value of nan asset, successful position of manufacturing, proviso chain, portfolio guidance and marque equity.”

Ackerman adds: “Mead’s maturation way grounds is mixed and it will require much capex fixed nan changes successful US IF regulation. Consequently, we think investors whitethorn for illustration much Huel-type bolt-ons.

“We’d expect Reckitt to hold for nan litigation to beryllium resolved earlier moving forward, to protect valuation. Reckitt paid circa $17bn for Mead Johnson successful 2017 but consequent impairments, litigation consequence and slower class maturation mean expectations are now substantially lower.”