Reckitt Benckiser Group plc has announced an agreement to divest its Essential Home business to private equity firm Advent International in a transaction valuing the business at up to US$4.8 billion (£3.7bn).
Under the terms of the deal, Reckitt will sell a 70% stake in Essential Home while retaining a 30% equity interest, giving it continued exposure to the business and its future growth.
The transaction is expected to complete by 31 December 2025, subject to regulatory approvals and employee consultations.
Focusing on Powerbrands
The divestment is part of the strategic plan Reckitt set out in July last year to concentrate on its 11 high-growth, high-margin “Powerbrands.”
The Essential Home portfolio includes well-known global names such as Air Wick, Calgon, Woolite, Cillit Bang, Resolve, Sole and Easy-Off, and operates across air care, surface care, pest control and laundry segments.
In 2024, Essential Home generated around £2 billion in net revenue, representing approximately 14% of Reckitt’s total sales.
Chief Executive Officer Kris Licht described the sale as “a significant step forward in unlocking the substantial value in our business.”
He added: “This move simplifies and strengthens Reckitt, enabling us to focus on our core portfolio of high-growth, high-margin Powerbrands. Essential Home will also benefit from Advent’s majority ownership and their expertise, while our retained minority stake gives Reckitt the opportunity to share in the business’s long-term success.”
Transaction details
The deal values Essential Home at a multiple of 7.7 times its adjusted operating profit for the 12 months ending March 2025.
The enterprise value includes up to around US$1.3 billion of contingent and deferred consideration, which depends on Essential Home’s future performance and other factors.
Reckitt expects to incur around US$800 million in one-off costs associated with the separation, mostly payable in 2026.
Following completion, Reckitt plans to return excess capital to shareholders through a special dividend of approximately US$2.2 billion, alongside its ongoing share buyback programme.
As part of the transaction, Reckitt and Advent have entered into a shareholder agreement that provides Reckitt with board representation and minority consent rights while it holds a significant stake. The companies will also enter into transitional services and manufacturing agreements to ensure business continuity during the separation.
Ranjan Sen, Managing Partner at Advent, commented: “This is a unique opportunity to create a focused, scaled platform of globally recognised home care brands. We see strong foundations in the Essential Home portfolio and are confident in unlocking its full potential. We look forward to working closely with Reckitt and the Essential Home leadership team on this exciting journey.”
Global footprint
Essential Home’s brands are sold in over 70 markets worldwide, and the transaction includes the transfer of interests in six manufacturing plants located in Mexico, Hungary, the UK, Spain, Portugal and Argentina. Part of the Raposo plant in Brazil will also be separated in due course.
Reckitt remains on track to mitigate stranded costs from the divestment, with plans to reduce fixed costs by at least 300 basis points and reach a fixed-cost base of approximately 19% of net revenue by the end of 2027.
The sale remains subject to customary consultations with employee bodies in France, the Netherlands and other jurisdictions, as well as regulatory approvals.
Reckitt to divest Essential Home in $4.8bn deal with Advent International
