Reckitt Benckiser has been given the green light to take over SSL, the maker of Durex condoms and Scholl sandals. The news sent its shares up 0.76%, or 26p to £34.44, making it one of the biggest risers on the FTSE 100 today.
The consumer goods firm received conditional EU regulatory approval last night to purchase SSL, a move that will boost its presence in health and personal care. Reckitt, which makes Nurofen painkillers and Strepsils, agreed to sell SSL's brands for mouth pain relief products in Britain and Ireland to ease regulatory concerns about overlaps. It unveiled the £2.5bn deal in July.
Goldman Sachs raised its recommendation to "buy" from "neutral" and lifted its target price to 4,300p from 3,550p, and said:
We expect consensus estimates to increase as analysts incorporate SSL's earnings into their forecasts for Reckitt Benckiser. We believe this will act as a positive catalyst for share price performance.
The broker upgraded its earnings estimates, doubling its forecast for earnings per share growth over the next five years to 10%, and increasing its 2011 and 2012 EPS estimates by 16% and 27% respectively.
