Listen to this article

The basics:

• Reckitt to sell Essential Home to Advent for $4.8B
• Company will retain a 30% minority stake in the new entity
• Move aligns with shift toward core health and hygiene brands

As part of a sweeping reorganization effort, Reckitt Benckiser Group plans to sell its Essential Home business to private equity firm Advent International in a deal worth $4.8 billion.

Under the terms of the arrangement announced July 18, the multinational company would retain a 30% stake in the carved-out unit. The business’s more than 75 brands includes Air Wick fresheners, Easy-Off oven cleaner, Calgon water softener and Resolve carpet cleaner.

The transaction’s structure includes $1.3 billion in contingent and deferred payments and about $400 million tied to future performance, according to Reckitt. It also calls for a series of transitional service agreements (TSAs) and manufacturing/supply contracts to ensure a smooth operational handover.

The deal is expected to close by Dec. 31, according to Reckitt.

Earlier this year, Reckitt shifted to a new operating model in an attempt to reshape itself into “a simpler, more effective organization with fewer management layers and reduced duplication.” Additionally, the company expects to sharpen focus on “high-growth, high-margin Powerbrands.”

After conducting a strategic review of its portfolio, Reckitt plans to move away from its nutrition and essential home division to concentrate on core brands within the consumer health and hygiene categories.

Home care also moving out

By the end of 2025, Reckitt also plans to sell off its home care brands business. According to the company, the unit generated roughly $2.6 billion in net revenue and $637 million in operating profit last year – about 13% to 14% of the its total revenue.

With home care divested, Reckitt said it will prioritize the 11 remaining “powerbrands,” including Mucinex, Strepsils, Gaviscon, Nurofen, Lysol, Dettol, Harpic, Finish, Vanish, Durex and Veet.

According to Reckitt, the overall strategy aims to reduce annual fixed costs from the current 22% to 19% by 2027. However, a $1.3 billon restructuring and transformation cost is expected, the company said.

Layoffs

Since unveiling the broader campaign, Reckitt has disclosed plans to cut 190 jobs at its U.S. headquarters in Parsippany by Aug. 1.

Reckitt Chief Executive Officer Kris Licht said, “We are executing our strategic plan at pace. The divestment of Essential Home represents a significant step forward in unlocking the substantial value in our business. This moves Reckitt towards becoming a simpler, more effective world-class consumer health and hygiene company and it will enable us to focus on a core portfolio of high-growth, high-margin Powerbrands.”

He added, “Essential Home will benefit from Advent’s new majority ownership with our retained minority stake in Essential Home providing a potential long-term value enhancement opportunity for Reckitt.”

Advent’s managing partner, Ranjan Sen, commented, “We are delighted to partner with Reckitt and the Essential Home management team. The carve-out represents a unique opportunity to create a focused, scaled platform of globally recognized home care brands that operate in attractive categories with structural growth tailwinds.”

“We are confident we can build on the portfolio’s strong foundations to drive operational excellence and unlock the brands’ full potential. We look forward to working closely with Reckitt and the Essential Home leadership team on this exciting journey,” Sen said.