British consumer goods maker Reckitt Benckiser Group is in advanced talks to buy baby formula maker Mead Johnson Nutrition for $16.7 billion.
The deal would take it in a new direction and boost its business in Asia.
Reckitt, which is best known for its cleaning and over-the-counter health products, said it was in talks to offer $90 in cash for each Mead Johnson share, a 29.5% premium to the stock's closing price.
Mead Johnson, which makes Enfamil baby formula, had been long rumoured as a takeover target for Danone or Nestle.
The company has been seen as a bid target since being spun off from drugmaker Bristol-Myers Squibb in 2009, due in part to its big presence in Latin America and Asia, regions with fast-growing populations.
Reckitt, which makes Nurofen tablets, Lysol cleaners and Scholl footcare products, was not seen as an obvious buyer given it is not in the baby food business and its overall food business is very small.
Still, Reckitt's focus on consumer health products, or health-related goods sold over the counter, makes Mead Johnson a good fit, analysts said.
Reckitt said it expected to finance the proposed deal through cash and debt.
"The parties are presently engaged in a period of due diligence and contract discussion," it said in a statement.
Mead Johnson also confirmed the discussions in a statement.
Sources told Reuters in 2014 that Danone was interested in buying Mead Johnson but the French company has since agreed to buy WhiteWave, known for its soy and nut-based milks, reducing the chances of a counterbid.
Speculation regarding a bid by Nestle recently resurfaced after a media report citing unidentified sources, yet Nestle's existing baby formula business would likely throw up competition concerns.
