- Price
- $13.30 → $13.71(+3.1%)
- Discount
- 28.5% → 26.3%(−2.2 pts)
- About
- Reckitt Benckiser is a UK-based consumer health and hygiene company. It calls its core business "Core Reckitt," built around 11 "Powerbrands" that make up aboutmore than 80% of Core Reckitt net revenue: Dettol and Lysol in disinfectant cleaning, Finish and Vanish in dishwashing and stain removal, Harpic in toilet cleaning, Nurofen, Mucinex, Gaviscon, and Strepsils in over-the-counter health, and Durex and Veet in intimate wellness. Separately, it owns Mead Johnson Nutrition, maker of the Enfamil infant formula brand, which it bought in 2017 for close to $1816.6 billion in 2017 and has been trying to sell sinceequity, or about $17.9 billion with debt. In July 2024, Reckitt said that Mead Johnson is not a core business and that it will consider all options for it. In December 2025, Reckitt completed the sale of its Essential Home business, including Air Wick and Calgon, to private equity firm Advent International for up to $4.8 billion, including up to about $1.3 billion of later payments, keeping a 30% stake in the buyer's holding vehicle. Emerging markets are now Reckitt's main growth engine, while Europe and North America grow more slowly or shrink. Reckitt's ordinary shares trade on the London Stock Exchange; five RBGLY ADRs represent one ordinary share.
- Thesis
- Reckitt Benckiser trades at a discount because investors worry about two issues. First,The first issue is Mead Johnson:. In July 2024, Reckitt has tried for two years to sell itssaid that the infant-formula unit is not core, but it has not announced a sale. Lawsuits over necrotizing enterocolitis (NEC), a serious bowel disease in premature babies linked to Enfamil formula, keep complicatingmake a sale more difficult. Second, the Essential Home divestment made adjustedThe second issue is lower reported earnings. Adjusted earnings per share fall sharplyfell 9.7% in H1 2026, simply because the profit that business used to contributeof Essential Home, which Reckitt sold, is gone. For the gap to close, Core Reckitt's like-for-like growth means sales growth after removingmust stay at or above the effect of currency swings and business changes. For the discount to close, that growth needs to keep accelerating past the 4.2% pace it reached inof Q2 2026. That would match, in line with the 4%- to 5% full-year guidance management has heldfor 2026. Like-for-like growth removes the effect of currency and of businesses bought or sold. A sale of Mead Johnson, even at a price much lower price than what Reckitt paid in 2017, would remove a majorlarge distraction. It would and let the market value the simpler remaining business on its ownalone. Mead Johnson alsohas no adverse NEC jury verdict outstanding. It won itsthe first federal bellwether NEC trial in August 2026, which removed one source of legal uncertaintyand an appeals court reversed a $60 million verdict in June 2026. HundredsBut hundreds of NEC lawsuits are still pending, though, and an earlier $60 million verdict was sent back for retrial rather than dismissedthe reversed case can go to a new trial. The next scheduled test istests are the Q3 trading update on October 27, 2026. It should give a fresh read on Core Reckitt growth. On November 19, 2026, Reckitt holds and an investor event about itson North America businesson November 19, 2026. Further newsNews on the Mead Johnson sale could arrivecan come at any point, given how long that process has already runtime. If growth keeps compoundingholds and Mead Johnson is fully sold, the discount couldgap can close within the nextabout a year. The main risk is that a large adverse NEC verdict or settlement, or a stalledno sale process, couldwhich would keep tying up capital and management attention well beyondtied up after 2026.
- Risks
- Mead Johnson still faces hundreds of pending necrotizing enterocolitis (NEC) lawsuits over Enfamil in US federal and state courts. Reckitt won the first federal bellwether trial in August 2026, but an earlier $60 million verdict against it was only reversed on appeal and sent back for retrial, not dismissed. No date is set for the next trial against Mead Johnson. In August 2026, Abbott agreed to pay about $670 million to settle about 2,000 NEC claims, which gives a reference for a possible Mead Johnson settlement. A large adverse verdict could still happen andor settlement would also make Mead Johnson harder to sell.
Reckitt has been trying to sellsaid in July 2024 that Mead Johnson Nutrition since 2024 and reportedly wants around $7 billionis not core, but it has announced no sale. A sale would probably be at a steep markdown fromprice far below the nearly $1816.6 billion it paid inequity price of 2017. Talks withThe last reported possible buyer was Danone were only exploratory as of, in April 2026, and no talks were confirmed. A stalled or failed sale process would keep tying up capital and management attention.
Adjusted earnings per share fell 9.7% in H1 2026 because Essential Home's profit contribution is gone. Further portfolio simplification, including a Mead Johnson sale, would likely cause a similar near-term earnings drag even if it is good for the business long term.
Europe, one of Reckitt's larger markets, keeps shrinking: like-for-like revenue there fell 4.2% in Q1 2026 and was still negative3.0% in H1 2026. Growth guidance depends on emerging markets and North America offsetting continued European weakness.
Reckitt reports in British pounds while RBGLY trades in US dollars. Swings in the pound-dollar exchange rate can move the ADR's returns up or down independent of how the underlying business performs.
RBGLY is a US over-the-counter ADR, not a NYSE or Nasdaq listing. It likely trades with less liquidity and wider bid-ask spreads than Reckitt's London-listed ordinary shares.
Private-label and store-brand products compete with Reckitt's household cleaning and OTC health brands, especially among price-sensitive shoppers, which can pressure volumes and limit pricing power in some categories.
- Balance sheet
- Cash: £874M
Debt: £10.2B
Net debt: £9.4B
EBITDA, last 12 months: £3.7B
Net debt / EBITDA: 2.5× (medium)
Undrawn credit line: £3.9B
Debt due within 12 months: £2.7B
Ratings: Moody's A3 (stable outlook), S&P A- (stable outlook)
Reckitt funds itself withborrows centrally through unsecured bonds, commercial paper and bank lines that it issues centrally. It keepsaims to keep the debt level of an A-rated company on purpose. At June 30, 2026, total borrowings wereDebt includes £10296 million of leases.2 billion and net debt was £9.4 billion. Net debt was 2.5 times 12-month adjusted EBITDA ofrose from £36.746 billion, up fromor 1.6 times adjusted EBITDA, at December 31, 2025. The reason is that Reckitt paidcauses are a £1.6 billion special dividend from the Essential Home sale, paid on February 20, 2026, and bought back £599 million of sharesshare buybacks in H1 2026. Near-term debt is higher than usual. A $2.5 billion bond became due in June 2027 is now in the debt due within one year. The companyAt June 30, 2026, Reckitt also issuedhad £723 million of commercial paper and drew £600 million drawn on a committed bank facility. But £3.9 billion of its £4.5 billion committed facilitiesFree cash flow in H1 2026 was still undrawn. Moody's rates Reckitt A3 and S&P rates it A-£419 million, both stable32.7% less than in H1 2025. Equity was only £5.7 billion, against £15.9 billion of goodwill and intangible assets. This comesEquity is low mainly because of a negative merger reserve of £14.2 billion from past write-downsthe 1999 merger of Mead JohnsonReckitt & Colman and Benckiser, and because of large cash returns. Reckitt holds no provision for the NEC lawsuits, because after the trial wins it does not consider. It says that a payoutcost is not probable. Management expects leverage to start to fall through 2027 and cannot be reliably estimated, so new cash returns depend on free cash flowbut can be significant. The proceedsA sale of a Mead Johnson sale would beis the fastest way to cutreduce debt.
As of 2026-06-30.
- Recent events
- 2026-09-16: Reckitt announced up to $600 million of multi-year investment in its US operations, including a new science and innovation campus in New Jersey and an expanded OTC manufacturing facility in North Carolina opening in H1 2027.
2026-09-01: J.P. Morgan upgraded Reckitt to overweight from neutral, coinciding with after the Mead Johnson trial win and raised its price target to 6,500p from 5,800p. Reckitt shares rose about 4.3% that day.
2026-08-31: A federal jury in Chicago returned a unanimous defense verdict for Mead Johnson in Inman v. Mead Johnson, the first bellwether trial to reach a verdict in the multidistrictfederal NEC baby-formula litigation (MDL 3026) to reach a jury verdict. The London market was closed that day, and Reckitt shares rose on September 1.
2026-08-20: Abbott, the newsother defendant in the NEC lawsuits, agreed to pay about $670 million to settle the $495 million Gill verdict and about 2,000 other NEC claims, with no admission of liability. Mead Johnson was not part of this settlement.
2026-07-29: Reckitt reported H1 2026 results. Core Reckitt like-for-like net revenue grew 2.7% in H1, accelerating to 4.2% in Q2. Adjusted diluted EPS fell 9.7% to 152.1p, mainly due to the Essential Home divestment. The board raised the interim dividend 5% to 88.6p and announced a new buyback of up to £500 million over the next 12 months. Full-year guidance was maintained.
2026-06-12: The Illinois Fifth District Appellate Court reversed a $60 million jury verdict against Mead Johnson in Watson v. Mead Johnson, an NEC case, citing errors in jury instructions on the duty to warn, and sent the case back for a new trial.
2026-04-1009: PressFrench press reports said that Danone was exploringstudying a bid for Mead Johnson Nutrition. Neither company confirmed talks, with Reckitt reportedly seeking offers of around $7 billion, far below the nearly $18 billion it paid for the business in 2017and no sale price was confirmed.
2026-02-20: Reckitt paid a £1.6 billion special dividend (235 pence per share) to shareholders followingafter the Essential Home sale, alongside a. A 24-for-25 share consolidation took effect on February 2, 2026.
2025-12-31: Reckitt completed the sale of its Essential Home business (Air Wick, Calgon, Cillit Bang) to Advent International for up to $4.8 billion, retainingincluding up to about $1.3 billion of contingent and deferred payments. Reckitt kept a 30% stake in the acquisition vehicle.