Food group Nestle in $11.85bn deal to acquire Pfizer’s infant nutrition unit

Swiss food group Nestle SA (VTX:NESN) is taking over the infant nutrition business of US pharmaceutical giant Pfizer Inc (NYSE:PFE) in a USD11.85bn (EUR8.9bn) deal, the two companies said on Monday.

Nestle’s chief executive, Paul Bulcke, said infant nutrition has always been core to the group’s business and with this addition it would widen its portfolio and expand its position in the global sector.

The business to be bought makes 85% of its sales in emerging markets, complementing perfectly Nestle’s own baby nutrition operations while serving its growth-focused strategy, the buyer said.

For Pfizer, which has been reviewing alternatives for the nutrition business, the divestment is in line with its goal to generate shareholders value, chairman and CEO Ian Read said, adding the group would use the funds to buy back shares or invest in other business development projects.

Pfizer Nutrition, whose revenues increased by annual 15% to USD2.1bn in 2011, has sales, product development, manufacturing and business centres in the US, Latin America, Europe, the Middle East, Africa and Asia.

Its portfolio includes everyday and speciality infant and toddler formulas, follow-on formulas, as well as maternal and adult nutrition products. Its employees in 60 countries will be taken on by Nestle pending consultations with work councils and unions.

Completion, subject to conditions including regulatory approvals, is expected in the first half of 2013.

Pfizer is being advised by Morgan Stanley & Co LLC, Centerview Advisors LLC, Skadden, Arps, Slate, Meagher & Flom LLP, Clifford Chance LLP and DLA Piper LLP.