UK household goods giant Reckitt Benckiser has agreed to buy US baby milk maker Mead Johnson for $16.6 billion. Its cash offer of $90 per share has been accepted by Mead Johnson’s board, with Chairman James Cornelius saying Reckitt’s offer provides “tremendous value” to shareholders. The deal is worth $17.9 billion, once Mead Johnson’s debt is taken into account.

"Mead Johnson's geographic footprint significantly strengthens our position in developing markets, which account for approximately 40% of the combined group's sales, with China becoming our second largest ‘Powermarket,'" said Rakesh Kapoor, CEO of Reckitt Benckiser.

Kasper Jakobsen, Mead Johnson’s CEO, said it will derive benefits from both increased scale and diversification.

Mead Johnson has been an ongoing target of takeover speculation since it was spun out of Bristol-Myers in 2009. The US group, which has about a 10% share of the global infant nutrition market, led by its Enfamil milk formula brand, posted sales of $3.7 billion in 2016.

UK newspaper Financial Times, quoting analysts at Credit Suisse, said the deal makes more financial than strategic sense, although it opens new opportunities in an attractive category.

Closing of the transaction, which remains subject to the usual conditions, including shareholder and regulatory approvals, is expected to occur during the third quarter of 2017. Both companies have agreed a $480 million break-up fee if either party walks away from the deal, subject to certain conditions.

The UK group will fund the deal through a combination of cash and new debt. With no overlap in infant nutrition, synergies are restricted to £200 million by the third full year after the transaction closes.