Reckitt finalizes deal to buy Mead Johnson for $16.6 billion

NEW YORK - Reckitt Benckiser has agreed to buy U.S. baby formula maker Mead Johnson Nutrition for $16.6 billion, giving the British consumer goods company a new product line and expanding its presence in developing markets.

Reckitt, the maker of Lysol cleaners and Durex condoms. said on Friday it will pay $90 in cash for Mead Johnson shares, a 30 percent premium to their closing price the day before Reckitt said it was in advanced talks with the maker of Enfamil baby formula.

Including Mead Johnson's debt, the deal is worth $17.9 billion and Reckitt Benckiser said it would finance the acquisition with debt underwritten by Bank of America/Merrill Lynch, Deutsche Bank and HSBC.

Reckitt Chief Executive Rakesh Kapoor said the deal was "a significant inflection point" for its business as it nearly doubled the size of its faster-growing consumer health business and expanded Reckitt's developing market presence by two thirds.

China will become Reckitt's second-largest market behind the United States following the acquisition of Mead Johnson, which was long seen as a potential takeover target for Danone or Nestle but never Reckitt.

Analysts at Credit Suisse said the Mead Johnson acquisition "would seem to tick the 'financial logic' rather better than the 'strategic logic,' but opens up a lot of opportunities in a very attractive category."