Reckitt share price hit by court case over premature infant formula
Shares in Hull-based health and hygiene product specialist, Reckitt, have fallen to their lowest level since January 2013.
They dropped 9% this morning – 29 July – after negative read across from a court case in the US involving Abbott Laboratories.
A court has ordered Abbott to pay $495m/£386m over allegations it hid the risks around its premature infant formula.
Dan Coatsworth, investment analyst at AJ Bell, noted: “Reckitt’s shares have been severely depressed since March as the market worries about the scale of any potential liabilities if the company loses legal battles around the safety of its baby formula.
“A US court case has already awarded $60m in damages to a mother who said her baby died after consuming Reckitt’s Enfamil baby formula. Several hundred similar claims have been in filed in US courts targeting Reckitt and Abbott.
“The more setbacks for either baby formula maker, the more complicated it becomes for Reckitt to sell its nutrition arm. Reckitt last week indicated it might be up for sale, saying it was considering all options for the business.
“Any potential buyer could be put off by the possibility of liabilities from the court cases, meaning the pressure is growing for Reckitt to find a way to ringfence a large amount of money in case it loses big time in the court battles.”
