(Reuters) – British consumer goods company Reckitt is under pressure from major shareholders to review the sale of its Mead Johnson Nutrition business, following litigation and other setbacks at the division, the Financial Times reported on Wednesday.
Reckitt acquired US infant formula maker Mead Johnson Nutrition for $16.6 billion in 2017, but is currently seeking to overturn a $60 million verdict in a lawsuit after a jury ordered the unit to pay the mother of a premature baby who died from an intestinal disease after being fed Enfamil infant formula.
The company said it faces “contingent liability” – a term used for obligations that depend on a future event – from a product liability lawsuit filed against Mead Johnson in the United States.
Portfolio managers at Reckitt’s third-largest shareholder, Flossbach von Storch, and Causeway Capital Management, a top 10 shareholder, told the FT they were open to seeing Reckitt sell the unit.
“Nutrition doesn’t really have a strong strategic fit, and we are open to seeing the business find a new owner,” said Simon Jäger, portfolio manager at Flossbach von Storch, according to the FT.
A portfolio manager at Causeway Capital Management told the FT that “Reckitt has identified the nutrition business as not being a future fit for them.”
Reckkit, Flossbach von Storch and Causeway Capital Management did not immediately respond to Reuters requests for comment.
Reckitt shares are down about 19% this year.
(Reporting by Devika Nair in Bengaluru; Editing by Sonia Cheema)
