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Even as consumer companies and prescription drug-makers zero in on emerging opportunities in the OTC healthcare market, global consumer goods major Reckitt Benckiser has inked a deal to acquire US group Schiff Nutrition for $1.4 billion. The deal gives Reckitt Benckiser a firm foothold in the burgeoning $30 billion vitamins and nutrition supplements market.

The global major has walked away with the deal whereas German major Bayer opted out of its $1.2 billion bid offer for Schiff. In the event, Schiff will pay Bayer a $22 million fee to terminate an earlier deal.

With this deal, Reckitt adds popular brands like MegaRed for heart care, Move Free for joints and Tiger's Milk nutrition bars to its product portfolio. Commenting on the development, Reckitt Benckiser CEO Rakesh Kapoor said in a statement that "Schiff's portfolio is an excellent fit with our strategic focus on health and hygiene."

Kapoor added that "The sub-categories within which Schiff operates have strong growth momentum and to this we expect to combine Reckitt Benckiser's strong go to market capabilities as well as proven skills in branding, innovation and consumer communication and education."

He stated that the integration process will be undertaken promptly following completion of the transaction so that the business can continue its growth trajectory with minimum disruption and realise synergies as soon as possible.

Reckitt had launched its tender offer for Schiff on November 16 with the expectation that the deal would boost its earnings immediately on an adjusted basis. The company said also in a statement that Schiff's board of directors had given its approval for the previously announced cash tender offer of $42 per share and recommended shareholders tender into the deal.

Reports now suggest that Reckitt is making an unusually large bid for Schiff which works out to be 16.5x Schiff's $85 million expected earnings before interest, tax, depreciation and amortization (EBITDA) in the year to May 2013. It is also reported that Reckitt's bid is nearly twice of what Carlyle had paid for supplements maker NBTY two years ago.

Pertinent to note that Reckitt has to its credit successful takeovers that include the acquisition of Boots's OTC drugs business, cough medicines company Adams and Durex condoms group SSL.

Morgan Stanley is the financial adviser to Reckitt for this deal, while Houlihan Lokey advised Schiff, alongside Rothschild. Bank of America Merrill Lynch had advised Bayer.