Confirmation (17 Nov) that consumer goods group Reckitt Benckiser (RB.) is floating its drug business is good news for the parent but investors should steer clear of the new entity.
The division, now called Indivior, could be valued by the market at anywhere between £1 billion and £4 billion, according to commentators. It specialises in addiction treatments and has suffered from generic competition to its flagship drug Suboxone, which helps those addicted to heroin.
Reckitt Benckiser, known for its Finish and Dettol brands, sees the drugs business as non-core and wants to concentrate on its consumer brands. In the six months to July the division made an operating loss of £196 million, while its FTSE 100 parent made £1 billion operating profit.
Indeed, profit losses and a lack of exclusivity does not appear a winning combination for a trade buyer.
The demerger will be put to shareholder vote on 11 December.