British consumer goods company Reckitt is under pressure from top shareholders to revisit a sale of its Mead Johnson Nutrition business, following litigation and other setbacks at the division, the Financial Times reported on Wednesday.
Reckitt acquired U.S. baby formula maker Mead Johnson Nutrition for $16.6 billion in 2017, but is currently seeking to overturn a $60 million verdict in a lawsuit after a jury ordered the unit to pay the mother of a premature baby who died of an intestinal disease after being fed the Enfamil baby formula.
The company has said it faces "contingent liabilities" - a term used for those dependent on future events - from the product liability suit filed against Mead Johnson in the United States.
Portfolio managers at Reckitt's third largest shareholder Flossbach von Storch, and Causeway Capital Management, a top-10 shareholder, told the FT that they would be open to seeing Reckitt sell the unit.
"Nutrition does not really have a strong strategic fit, and we'd be open to see that business find a new owner," said Simon Jäger, a portfolio manager at Flossbach von Storch, according to the FT.
A portfolio manager at Causeway Capital Management told the FT that "Reckitt has identified the nutrition business as one that doesn’t fit into their future."
Reckkit, Flossbach von Storch, and Causeway Capital Management did not immediately respond to Reuters request for comment.
Reckitt's shares are down about 19% this year.
(Reporting by Devika Nair in Bengaluru; Editing by Sonia Cheema)
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