infant formula

Reckitt Benckiser ‘may shelve plan to sell infant-nutrition unit’

UK consumer goods major Reckitt Benckiser is reportedly considering postponing plans to sell its infant-formula unit.

News agency Bloomberg, quoting unnamed sources familiar with the situation, said the sale, reputedly worth US$7bn, has fallen victim to “chaos in the industry and worsening financing markets”.

The company reportedly kicked off plans to sell its remaining businesses in infant formula in April and was said to be working with advisers on moves to sell the assets, which include the Enfamil brand. A number of private-equity firms, including Clayton Dubilier & Rice, were linked with a possible acquisition.

A sale would mark Reckitt’s exit from infant formula five years after buying US manufacturer Mead Johnson. Last year, the company sold its infant-formula operations in China to local investment firm Primavera Capital Group. Reckitt Benckiser kept an 8% stake in the business.

However, last month it was reported that potential buyers had been spooked by a US shortage of infant-nutrition products caused by the closure of an Abbott Laboratories plant following a salmonella scare.

Ironically, Reckitt Benckiser is one of the companies that has increased the production of its products to help keep supermarket shelves stocked.

But, according to Bloomberg’s report, talks between the London-listed company and potential acquirers have stalled in recent weeks.

Aside from the baby-formula crisis, the media outlet cited disagreement over valuation and a lack of available funding for reasons no deal has been sealed.

The structure of the sector is also coming under increased scrutiny by regulators, keen to ensure that shortages do not occur in the future.

The report said Reckitt Benckiser has not yet made a final decision on whether to formally pull the sale.

Just Food has asked Reckitt Benckiser to comment on the Bloomberg story.

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Abbott Nutrition restarts baby formula production in reopened Michigan plant

Shelves normally meant for baby formula sit nearly empty at a store in downtown Washington, DC, on May 22, 2022.

Samuel Corum | AFP | Getty Images

Abbott Nutrition on Saturday resumed baby formula production at its Sturgis, Michigan, plant, a move toward addressing a nationwide shortage.

The company has been given the green light from the U.S. Food and Drug Administration after meeting "initial requirements" as part of a May 16 consent decree.

The company said it will restart the production of EleCare, a formula for children who struggle to digest other products, along with other specialty and metabolic formulas.

Abbott aims for an initial EleCare product release around June 20 and is working to meet guidelines to resume production of Similac and other formulas.

"We understand the urgent need for formula and our top priority is getting high-quality, safe formula into the hands of families across America," a spokesperson for Abbott said in a statement. "We will ramp production as quickly as we can while meeting all requirements."

While supply problems started early in the Covid-19 pandemic, issues worsened in part due to the February closure of the Michigan plant amid scrutiny over contamination.

FDA investigations began after four infants were hospitalized with bacterial infections from drinking its powdered formula. Two of the babies died.

"The FDA is continuing to work diligently to ensure the safe resumption of production of infant formula at Abbott Nutrition's Sturgis, Michigan, facility," the FDA said in a statement.

"The agency expects that the measures and steps it is taking, and the potential for Abbott Nutrition's Sturgis, Michigan, facility, to safely resume production in the near-term, will mean more and more infant formula is either on the way to or already on store shelves moving forward," the FDA said.  

Abbott Nutrition is the largest baby formula manufacturer in the U.S.