Nestlé to Buy Pfizer Baby Food Unit for $11.9 Billion

23 Apr 2012 --- Swiss food group Nestlé is to buy U.S. drugmaker Pfizer's infant nutrition business for $11.85 billion (7.35 billion pounds), beating out French rival Danone and extending their reach in the increasingly lucrative market category.

Nestlé, the world's biggest food company, was already seen as a favored bidder due largely to its vast financial reserves, the company is paying for the acquisition of the company in cash. The acquisition is still subject to regulatory approval.

 

Nestlé say the move will allow them to combine well-known brands like S-26 Gold, SMA and Promil with their existing portfolio of successful brands such as Nan, Gerber, Lactogen, Nestogen and Cerelac infant cereal.

 

The bidding process for the unit became increasingly contested towards the end of last week, with the price escalating sharply from initial bids closer to $10 billion, after Danone was reported to have raised its offer on Friday.

 

Nestlé CEO Paul Bulcke, said of the acquisition: “Infant nutrition has been at the heart of our company since it was founded in 1866. Pfizer Nutrition is an excellent strategic fit and this acquisition underlines our commitment to be the world’s leading nutrition, health and wellness company. Its strong brands and product portfolio, its talented people dedicated to the success of its business, together with its geographic presence - 85% of its sales are in emerging markets - will complement our existing infant nutrition business perfectly. The combined entities will enable us to deepen our engagement with consumers, offering them a wider choice of nutritious food to ensure their children make a healthy start to a healthy life.”

 

The acquisition, which is subject to regulatory approval, will be accretive to the Nestlé model both for growth and margins as well as the group’s earnings per share in the full first year.

 

Nestlé estimates the acquired business’ 2012 sales at $2.4 billion. Eighty five percent of Pfizer Nutrition’s sales are in emerging markets, many of them with large, fast-growing populations.