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NEW YORK Don’t be surprised to see an “Under New Management” sign hanging from the door of Mead Johnson’s doors sometime soon — the split-off makes it easier now for Mead Johnson to be acquired, and it just may be a very lucrative target.
There had already been talk around the possibility of a Mead Johnson sale, with companies such as Groupe Danone, marketers of Activia yogurt and Evian water, being identified by analysts as a “good fit,” especially following their acquisition of Royal Numico two years ago. (Though Danone issued a press release in September stating it was not engaged in talks at that time to acquire Mead Johnson). Nestle has also been identified as a possible bidder by analysts.
Mead Johnson’s leading infant nutrition brand, Enfamil, would fold in nicely into Danone’s product portfolio, analysts suggested. All told, Mead Johnson fields more than 70 products, including formula for breastmilk substitution and nutritional supplements for children. As much as 80% of the company’s business is routine for healthy infants and children; 20% are for those with special needs, identified as a “sweet spot” in an investor presentation last week by Mead Johnson CEO Stephen Golsby. “These are high growth, high margin businesses with very high barriers to entry,” he told analysts Nov. 11. “We drive demand for these brands and products using a three-pillared strategy. We drive demand through healthcare professionals, direct to the consumer and in partnership with retailers and pharmacies.”