Bollywood Fever: British consumer goods company Reckitt is facing pressure from major shareholders to reconsider selling its Mead Johnson Nutrition business, following litigation and other setbacks in the division, the Financial Times reported on Wednesday.
Reckitt acquired the U.S. baby formula maker Mead Johnson Nutrition for $16.6 billion in 2017. However, the company is currently seeking to overturn a $60 million verdict in a lawsuit where a jury ordered the unit to pay the mother of a premature baby who died from an intestinal disease after being fed the Enfamil baby formula.
The company has acknowledged it faces “contingent liabilities” from the product liability suit filed against Mead Johnson in the United States. This term refers to liabilities that depend on future events.
Portfolio managers at Reckitt’s third-largest shareholder, Flossbach von Storch, and Causeway Capital Management, a top-10 shareholder, expressed to the FT their openness to seeing Reckitt sell the unit.
Nutrition does not really have a strong strategic fit, and we’d be open to see that business find a new owner,” said Simon Jäger, a portfolio manager at Flossbach von Storch.
A portfolio manager at Causeway Capital Management added, “Reckitt has identified the nutrition business as one that doesn’t fit into their future.”
Reckitt, Flossbach von Storch, and Causeway Capital Management did not immediately respond to Reuters’ request for comment.
Reckitt’s shares have declined by about 19% this year.
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