Reckitt Benckiser addresses potential spin-off amid us litigation concerns

USA – Reckitt Benckiser CEO Kris Licht has refrained from ruling out the possibility of a spin-off of its Mead Johnson infant nutrition business amid ongoing litigation in the US.

Mead Johnson, known for producing brands like Enfamil and Nutramigen formulas, is facing potential damages of up to £2 billion (US$2.5 billion) related to cases of necrotizing enterocolitis (NEC) in premature babies.

Barclays has outlined a worst-case scenario for damages, with approximately 400 NEC cases pending in the US.

The concern arose after Reckitt awarded £60 million to Jasmine Watson, the mother of a baby who died from NEC after consuming Enfamil Premature 24 powder.

During an analyst call discussing Reckitt’s first-quarter revenue of £3.7 billion, Licht was questioned about the possibility of spinning off Mead Johnson.

He responded by stating that it is not prudent to speculate on structural moves at this time, emphasizing the company’s focus on navigating the litigation and expressing confidence in prevailing due to clear scientific evidence.

Regarding the impact on the brand, Licht noted some fluctuations in Nutramigen’s market share but emphasized overall stability.

He rejected any assertion that Mead Johnson products cause NEC and emphasized the company’s commitment to providing safe and nutritious products.

Litigation related to NEC claims is ongoing, including post-trial motions and a scheduled new trial. Despite near-term uncertainties, Reckitt remains confident in its position and the safety of its Enfamil premature products.

The nutrition division reported a like-for-like revenue decline of 9.9% in the first quarter, attributed to continued rebasing in US nutrition following elevated demand in 2022 due to a formula shortage caused by a recall by Abbott Laboratories.

However, Reckitt maintains its forecast of mid-single to high-single-digit declines in full-year nutrition sales, with overall group sales expected to rise by 2-4%.

Subscribe to our food and agriculture industry email newsletters that provide busy executives like you with the latest news insights and trends from Africa and the World. SUBSCRIBE HERE