Reckitt and Colgate To Merge?

The buzz started earlier today that Colgate and Reckitt Benckiser will merge after an article was published in The Daily Telegraph (UK). Spokespersons for both companies refused to comment on the rumors.

Reckitt Benckiser Plc is the world’s largest maker of household cleaners. Its shares rose as much as 3.7% in London trading after the Telegraph said the company may be close to a “multi-billion pound cross-border transaction.”

Colgate, the world’s largest toothpaste maker, is an “obvious candidate” to merge with Reckitt, the U.K. newspaper said late yesterday, citing “well-placed sources” it didn’t identify. SSL International Plc, the maker of Durex condoms, was also named in the newspaper as a potential Reckitt target.

Reckitt’s last major takeover was two years ago, when it bought Adams Respiratory Therapeutics Inc., a U.S. cold-medicine maker, for $2.3 billion. UBS AG analysts said Colgate’s attractions to a merger partner include a dominant share of toothpaste consumed in emerging markets.

“Longer-term, the logic still stands” for a Reckitt- Colgate transaction, Credit Suisse analysts wrote today. They added that they were “skeptical on the imminence of a deal,” citing no “immediate catalysts” and recent share sales by the U.S. company’s executives.