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RECKITT Benckiser, the consumer care company behind well-known brands such as Cillit Bang, Nurofen and Vanish, has agreed to buy SSL International – best known for Durex condoms and Scholl footcare – for £2.5b ($3.8b).

Some analysts questioned the price, which values SSL at over 18 times its EBITDA (earnings before income tax, depreciation and amortisation) - a very high multiple for the consumer health sector. But Reckitt Benckiser  says the price is justified. 

The acquisition is in line with Reckitt Benckiser’s strategy of growing its business in the health and personal care business, which tends to enjoy more generous margins than other areas of its business such as household and cleaning products. The company’s ceo, Bart Becht, says that the acquisition will increase Reckitt Benckiser’s earnings by over 36% to around £2.8b/y

“We believe that we could drive further growth in the acquired business, especially Durex and Scholl, by investing in SSL and Reckitt Benckiser's proven innovation and brand building capabilities and by taking advantage of our greater distribution strength,” he says.

Reckitt Benckiser expects to make savings of around £100m/y by the end of 2012, leading to speculation in the British media that the companies can expect some redundancies. 

The company is planning to start a review in the autumn to decide which of SSL’s businesses and brands it will keep, and if there are any it may sell.