J&J Sells K-Y Brand to Durex-Maker Reckitt Benckiser
Johnson & Johnson (NYSE:JNJ) agreed to sell its K-Y lubricant products to the British consumer goods business Reckitt Benckiser Group, the company that produces the Durex line of condoms, for an undisclosed sum, Bloomberg reported Monday.
The transaction doesn’t include any fixed assets or employees, and McNeill-PPC will continue to manufacture K-Y products, according to the Wall Street Journal. The exact terms of the transaction have not been released, although the deal is expected to close by mid-2014.
Reckitt Benckiser’s acquisition will include global rights to the K-Y brand, which is available in more than 50 countries and generated more than $100 million from its products in 2013.
Slough, Berkshire-based Reckitt Benckiser has continued to expand its line of consumer health labels through acquisitions during the past two years. The acquisition of K-Y “is just another small step to a bigger and bigger piece of the pie in consumer health,” Bernstein analyst Andrew Wood said Monday in a statement, per Bloomberg.
Rumor has it that Reckitt Benckiser has been eyeing Merck’s over-the-counter drugs business, as well, according to sources who spoke with Bloomberg; the company is said to have plans to become an “aggregator” in the consumer health market as companies continue to consolidate different segments of the industry.
Consumer health brands consist of more than 28 percent of revenue for Reckitt Benckiser, according to Bernstein; that’s up 5 percent from 2005, and the consumer health segment could account for more than half of the company’s operating profit as early as 2015, Bloomberg reports.
“K-Y, as a global leader in intimate lubricants with very high trust score among women, will sit alongside the RB Powerbrand to create a unique portfolio of brands in the sexual well-being category,” Reckitt said in a statement.
K-Y is currently the best-selling brand in the lubricant category, a market that is worth approximately $1 billion annually. About 70 percent of K-Y’s sales come from the U.S., Canada, and Brazil, according to a K-Y spokeswoman who spoke to Bloomberg.