Reckitt CEO Rakesh Kapoor Goes From Low Key to a Big Deal

By Saabira Chaudhuri

LONDON -- Among global consumer-goods giants, Reckitt Benckiser Group PLC has long been overshadowed by bigger and better-known peers like Procter & Gamble Co. and Unilever PLC.

Reckitt's Indian-born chief executive, Rakesh Kapoor, has kept a similarly low profile compared with many of his fellow chieftains running Britain's constellation of multinationals. He discourages executives from presenting at conferences or industry events and doesn't organize regular investor days for shareholders and analysts. He flies economy class on any trip shorter than six hours.

On Friday, though, he made his biggest corporate splash, announcing a $16.6 billion takeover of Glenview, Ill.-based baby-food maker Mead Johnson Nutrition Co. The deal caps a yearslong search by Mr. Kapoor for a big acquisition for Reckitt, the maker of such consumer goods as French's mustard and Durex condoms.

In 2014, he lost out in a fierce race to buy Merck & Co.'s consumer arm, which Bayer AG ultimately snapped up for $14.2 billion.

In both courtships, price was key. He dug his heels in during talks with Merck, eventually walking away. This time around, he had studied Mead for more than a year, according to a person familiar with the matter. Reckitt moved only after Mead's shares had fallen amid weak sales, and after other potential bidders lost interest or made other moves, people involved with the deal said.

"I don't think you should read too much into the timing," Mr. Kapoor told reporters on a conference call Friday.

Despite periodic criticism of his pay -- he is the second-highest-paid CEO in Britain -- Mr. Kapoor, 58 years old, has made a name for himself inside and outside Reckitt, mostly as a cost-cutting evangelist. He has said publicly that starving staff of resources forces creativity.

He is known to scrutinize purchases as small as office stationery, and he has resisted the lavish London corporate headquarters more typical of big multinationals based here. Mr. Kapoor runs Reckitt out of a brick building in the London suburb of Slough, the setting of the British version of "The Office" TV comedy. For big events, like Friday's deal announcement and semiannual earnings reports, he sets up camp in temporary space at Deutsche Bank AG's London headquarters.

"Their public face is very controlled," said RBC analyst James Edwardes Jones.

Mr. Kapoor has also said repeatedly that part of Reckitt's success has been his ability to run it like a small business.

"We might be bigger and bigger and bigger but we will always have this feeling of being small," he told investors in 2015. "I know exactly what is happening in the company because anyone will come and talk to me."

The deal comes after a tumultuous year for Reckitt. Last month, a South Korean court sentenced the former head of its local unit to seven years in prison, finding him guilty of accidental homicide and false advertising. That capped a yearslong probe into humidifier disinfectant sold by the sold before Mr. Kapoor became Reckitt's chief executive.

Investigators blame the products for more than 100 deaths. Reckitt itself wasn't held responsible, but Mr. Kapoor has publicly apologized, and sales of Reckitt products there have virtually disappeared.

Mr. Kapoor has also been a lightning rod in the past for what critics have called his outsize pay package. Mr. Kapoor made GBP23 million ($28.7 million) in 2015 compensation, the latest year available. Only Martin Sorrell, chief executive of WPP PLC, earned more at GBP70.4 million. Reckitt says the compensation is based on Mr. Kapoor meeting performance targets.

Reckitt's London-listed shares have more than doubled during his tenure, giving the company a market capitalization of more than $63 billion as of Thursday.

--Ben Dummett contributed to this article.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

February 10, 2017 13:13 ET (18:13 GMT)

Morgan Stanley DW Str Sat Att (NYSE:MJN)
Historical Stock Chart
From Mar 2024 to Apr 2024