$2.3 billion Adams deal opens door for Reckitt Benckiser to enter U.S. OTC market

CHESTER, N.J. Reckitt Benckiser Group, a London company, and Adams Respiratory Therapeutics Monday morning announced Reckitt’s acqusition of Adams for $60 per share in cash, or approximately $2.3 billion.

“The acquisition of Adams Respiratory Therapeutics is another step forward in Reckitt Benckiser’s growth strategy in consumer healthcare,” stated Bart Becht, Reckitt chief executive officer. “Adams will add to our portfolio a new, rapidly growing powerbrand in Mucinex, a market and innovation leader in cough and congestion relief in the U.S. Equally important, it will provide Reckitt Benckiser an entry into health care in the U.S., the world’s largest OTC market,” he said. “We have already shown with the acquisition of Boots Healthcare International that we can generate shareholder value in consumer healthcare. We believe Adams represents another attractive opportunity for our shareholders.”

Becht told European analysts that Adams gives Reckitt an ideal platform to enter the U.S. market with its portfolio of healthcare products under its Boots Healthcare International division, which Reckitt acquired in 2005, though there are no concrete plans for a U.S. introduction of Boots’ products yet.

“Principally our focus in the U.S. will be to continue with the very successful strategy Adams has employed over the last couple years and to continue to build the franchise behind that,” Becht said. “At this stage of the game, we have no … plans to launch other brands but clearly it’s early days and we will be revisiting this issue.”

Boots’ brands not currently distributed in the U.S. include the antiseptic Dettol, Nurofen, an analgesic, the sore throat lozenges and spray Strepsils and the cough and cold franchise Lemsip.

Boots also owns Clearasil and the depilatory Veet, which are distributed in the U.S.

Adams is currently active in the United States only and markets two brands—Mucinex, market leader in adult expectorants and Delsym, a leading cough suppressant. Mucinex represents most of Adams’ sales. There is opportunity for Reckitt to expand distribution of both Mucinex and Delsym beyond U.S. borders.

Adams’ net sales have grown from $14 million in the fiscal year ending June 2003 to $332 million for the fiscal year ending June 2007. A key driver of the company’s growth has been the approval by the FDA in 2002 of the Mucinex patent protected extended-release guaifenesin product for chest congestion relief.

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