(London UK, 18 July 2025): Reckitt Benckiser Group plc (“Reckitt”) announces it has entered into an agreement with Advent International, L.P. (“Advent”), a leading global private equity investor, to divest its Essential Home business (“Essential Home”) for an enterprise value of up to US$4.8 billion and retain a 30% equity stake in Essential Home (the “Transaction”).
In July 2024 Reckitt set out its strategy to reshape into a more efficient, world-class consumer health and hygiene company, focused on a portfolio of 11 high-growth, high-margin Powerbrands. The Transaction is a key part of this strategy and represents a significant step forward in reshaping Reckitt.
Transaction Highlights:
- The Transaction values Essential Home at an enterprise value of up to US$4.8 billion
- Equivalent to a multiple of 7.7x Essential Home’s unaudited adjusted operating profit for the 12 months ending 31 March 2025(1)
- Reckitt will retain an interest in Essential Home through a 30% equity stake in Advent’s acquisition vehicle providing a potential long-term value enhancement opportunity for Reckitt
- Enterprise value includes up to c. US$1.3 billion of contingent and deferred consideration
- Reckitt expects to incur cash tax, transaction and other one-off costs predominantly relating to the separation of Essential Home of c. $0.8 billion, with the majority payable in 2026
- Cash proceeds will be subject to balance sheet adjustments and the value of Reckitt’s equity stake rolled over at completion
- Excess capital to be returned to shareholders; anticipated c. US$2.2 billion special dividend with share consolidation following completion
- Special dividend will be in addition to Reckitt’s ongoing share buyback programme, with Reckitt intending to announce its next buyback tranche with H1 2025 results on 24 July 2025
- The Transaction is expected to complete by 31 December 2025 (subject to customary regulatory approvals)
- In line with Reckitt’s communication to date, Reckitt intends to mitigate the stranded costs from the separation of Essential Home and remains on track to unlock previously communicated cost efficiencies, delivering at least a 300bps reduction in fixed costs and exiting 2027 with a fixed-cost base of c. 19% of net revenue
Commenting on the agreement, Kris Licht, Reckitt Chief Executive Officer said:
“We are executing our strategic plan at pace. The divestment of Essential Home represents a significant step forward in unlocking the substantial value in our business. This moves Reckitt towards becoming a simpler, more effective world-class consumer health and hygiene company and it will enable us to focus on a core portfolio of high-growth, high-margin Powerbrands. Essential Home will benefit from Advent’s new majority ownership with our retained minority stake in Essential Home providing a potential long-term value enhancement opportunity for Reckitt.”
Ranjan Sen, Managing Partner, Advent commented:
“We are delighted to partner with Reckitt and the Essential Home management team. The carve-out represents a unique opportunity to create a focused, scaled platform of globally recognised home care brands that operate in attractive categories with structural growth tailwinds. We are confident we can build on the portfolio’s strong foundations to drive operational excellence and unlock the brands’ full potential. We look forward to working closely with Reckitt and the Essential Home leadership team on this exciting journey.”
Essential Home operates across the air care, surface, pest and laundry segments and generated c. £2.0 billion of net revenue in 2024, c. 14% of Reckitt’s total net revenue. Essential Home generated adjusted operating profit of £490(1) million in the 12-month period ended 31st December 2024. In the 3-month period ended 31st March 2025, Essential Home generated £482 million of unaudited net revenue, with like-for-like net revenue decline of 7.0%(2). In the 12-month period ended 31st March 2025 Essential Home generated unaudited adjusted operating profit of £486(1) million (US$620(1) million at actual FX rates).
The Essential Home portfolio includes the global brands Air Wick, Calgon, Woolite, Cillit Bang, Resolve, Sole and Easy-Off, as well as around 75 other brands across over 70 markets. Essential Home will also own the Mortein brand in North America, Europe and LATAM. Reckitt’s interest in six manufacturing plants will transfer with Essential Home, including plants in Tijuana (Mexico), Tatabanya (Hungary), Derby (UK), Granollers (Spain), Porto Alto (Portugal) and Florencio (Argentina), with a plan to separate part of the Raposo plant (Brazil) in due course.
The Transaction is expected to complete by 31 December 2025 following completion of key elements of separation of Essential Home from Reckitt’s Core business, and subject to consultation with Reckitt’s works councils, as applicable, including in France and the Netherlands, and the receipt of certain regulatory approvals. Reckitt will also engage with its other relevant employee bodies in relation to the Transaction as appropriate in accordance with applicable law.
Additional transaction details:
- Of the up to c. US$1.3 billion contingent and deferred consideration, up to c. US$0.4 billion is contingent on the operating performance of Essential Home in 2025, US$0.3 billion relates to vendor financing arrangements provided by Reckitt to Advent and up to c. US$0.6 billion of the consideration is contingent on certain return thresholds being achieved.
- Reckitt has entered into a shareholders’ agreement with Advent with customary shareholder rights, including board representation while it holds a significant minority stake, minority consent rights and rights relating to an exit. Advent will receive a preference over returns at certain thresholds.
- On completion, Reckitt and Essential Home will enter into a series of ancillary agreements, including a Transitional Services Agreement (“TSA”) and a Manufacturing and Supply Agreement (“MSA”), pursuant to which Reckitt will provide certain administrative, operational and support services, as well as manufacturing and supply arrangements, to Essential Home for a period post completion. In addition, Essential Home will provide a reverse TSA and MSA to Reckitt for a period post completion. These arrangements are intended to ensure continuity of operations and facilitate an orderly separation of Essential Home from Reckitt.
(1) Adjusted Operating Profit has been prepared by allocating fixed costs between Core Reckitt and Essential Home on the basis of Net Revenue and are not fully reflective of the cost base on a stand-alone basis.
(2) Net revenue growth or decline at constant exchange rates excluding the impact of acquisitions, disposals and discontinued operations. Disposals include low margin manufacturing revenues which are agreed at the time of sale of a brand or business. Completed disposals are excluded from LFL revenue growth for the entirety of the current and prior years. Acquisitions are included in LFL revenue growth twelve months after the completion of the relevant acquisition. LFL growth also excludes countries with annual inflation greater than 100% (Venezuela and Argentina)
Enquiries
Investors and Analysts:
Nick Ashworth +44 (0)7408 812350
Jon Bone +44 (0)7408 811493
Media:
Martinne Geller, Media Relations +44 (0)7408 801216
Charlie Armitstead, FTI Consulting +44 (0)7703 330269
Press Release
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