The deal will see Reckitt retain a shareholding in IFCN China of 8 per cent with the Hull firm anticipating net cash proceeds to be approximately US$1.3 billion.

The transaction follows a comprehensive strategic review of IFCN China announced in February 2021. The transaction is structured as a sale of the entirety of IFCN China, including the manufacturing plants in Nijmegen, the Netherlands and Guangzhou, China.

It includes a royalty-free perpetual and exclusive license of the Mead Johnson and Enfa family of brands in China.

Following completion of the transaction, Reckitt will continue to own the Mead Johnson and Enfa family of brands globally and will operate those brands in the rest of the world.

The transaction is subject to consultation with Reckitt’s works council in the Netherlands, which Reckitt will now initiate. Reckitt will also engage with its other relevant employee unions in relation to the transaction. Subject to the Netherlands works council consultation and the satisfaction of customary closing conditions, completion is expected in the second half of 2021.

Reckitt expects to incur cash tax costs of around £300 million and transaction and other costs of around £200 million. The net proceeds will be used to reduce net debt and would have lowered the December 2020 net debt / adjusted EBITDA ratio by around 0.2x to 2.2x.

Commenting on the sale, Reckitt CEO Laxman Narasimhan said: “Today’s announcement marks another step in our strategy to rejuvenate growth and create long term value. As part of this journey, we are actively, and decisively, managing our portfolio.

“After a thorough review of IFCN China, we have found an excellent home for the business under the ownership of Primavera. As a result of this transaction, our Nutrition business going forward will have a better and more consistent growth and margin profile. We are market leaders in infant nutrition in North America, ASEAN and Latin America, and we have a strong Vitamins, Minerals and Supplements portfolio which includes an exciting Adult Nutrition business. This, combined with our focus on execution, brand building and productivity, our investment in R&D and innovation, and our expertise in eCommerce, gives us a solid foundation from which to grow.

“We remain committed to China with our Hygiene, Health and VMS portfolios. We are excited about the opportunities to grow our brands and expand our business in the future. China is Durex’s largest market and growing strongly and it is an important market for Dettol, Finish and our VMS brands with significant potential for future expansion.

“Our portfolio is increasingly well-positioned to benefit from attractive fundamentals which, combined with our increased focus on operational execution, gives us confidence that we are taking the right steps to meet our medium-term targets.”

Primavera Founder and Chairman Dr. Fred Hu said: “We look forward to a strong collaboration with Reckitt, to continue to build on the heritage and strength of the Mead Johnson brand. We have considerable experience investing and growing and expanding global brands in China. We are excited to support the business in its next phase of growth, leveraging our resources and local leadership.”