Reckitt Benckiser has nabbed Latin American rights to a basket of Bristol-Myers Squibb's ($BMY) over-the-counter products for a cool $482 million. The U.K. consumer company wants to amp up its business in the region as part of an emerging-markets growth strategy. Last year, the products brought in $102 million in those markets.
The deal gives Bristol-Myers a 4.7-times-sales price for three years' worth of rights. Reckitt will have a purchase option at the end of that period. Bristol-Myers will continue to manufacture the products during the licensing period.
It's just the latest in a series of acquisitions for Reckitt, which has been beefing up the consumer-health side of its business. Late last year, it outbid Bayer for Schiff Nutrition, paying $1.4 billion for the U.S. supplements maker. The price raised some analysts' eyebrows; Bayer had bid $1.2 billion. At the end of 2010, Reckitt agreed to pay $726 million, or 8.2 times sales, for India's Paras Pharmaceuticals. In that case, it outbid a handful of Big Pharmas.
Can Reckitt make the Bristol-Myers products pay? "This is quite a small deal and the multiple is yet again eye-watering at 4.7 times sales," Exane BNP Paribas analyst Eamonn Ferry said in an investor note (as quoted by Bloomberg). "That said, it makes a lot of strategic sense, Reckitt can bring a lot to the table here, and it has been seeking a Latin American OTC asset for several years."
- get the release from Bristol-Myers
- read the Bloomberg story