UK household products group Reckitt Benckiser has beaten pharmaceutical heavyweights such as GlaxoSmithKline and Bayer to buy Boots over-the-counter medicines unit, Boots Healthcare International, for £1.9 billion in cash.

Explaining the company’s strategy behind the move, chief executive Bart Becht stated: “BHI will substantially strengthen Reckitt Benckiser’s global position in both healthcare and personal care, very attractive businesses as evidenced by the strong growth rates at good margins at both BHI and Reckitt Benckiser’s own health and personal care category.” He went on to note: “combined H&PC revenues will exceed £1 billion, an increase of 90%, and will represent 26% of the enlarged Reckitt Benckiser.”

According to Mr Becht, current strong growth of established OTC brands has, aside from factors such as an ageing population, been helped by a rise in consumer self-care for minor ailments, a trend encouraged by the Government as part of its drive to transfer some of the healthcare cost burden to the individual.

The acquisition of BHI will add three major brands to Reckitt’s offering: Nurofen, currently the top European and number two global ibuprofen brand in analgesics; Strepsils, the biggest-selling sore throat brand in the world; and Clearasil, the most popular brand of anti-acne treatment worldwide. According to the company, all of these have further growth potential, and it plans support BHI’s R&D and brand development capabilities as well as use its own distribution experience to propel growth through new channels and countries.

“Substantial synergies will result from the integration of BHI into Reckitt Benckiser. Specifically, Reckitt Benckiser targets £75 million in cost synergies and £130 million in net working capital synergies by 2008. The prospect that the deal is targeted to be immediately earnings enhancing (excluding the £150m one-off restructuring) combined with the growth potential and attractive margin profile makes this a good acquisition for shareholders,” Mr Becht claimed.

This deal will allow the remainder of the Boots business to be merged with Alliance Unichem to create Alliance Boots, an international pharmacy-driven healthcare powerhouse with combined sales of over £13 billion.

Investors seemed enthusiastic about the news: in early trading on the London Stock Exchange, shares in Reckitt jumped 61 pence to £17.67, and Boots’ stock climbed just under 1% to £6.26.