Pfizer close to sell infant nutrition division to Nestlé
American pharmaceutical company Pfizer is close to an agreement to sell its infant nutrition divisi…American pharmaceutical company Pfizer is close to an agreement to sell its infant nutrition division to Nestlé for $9bn, according to people familiar with the matter.
Nestlé seems to have been considered as the preferred bidder for the unit due to its huge cash reserves over Groupe Danone and Mead Johnson Nutrition, which agreed for a joint bid.
Pfizer and Nestlé are likely to announce the deal next week, reported The Wall Street Journal.
If Nestlé acquires Pfizer's infant nutrition business, it could face antitrust issues and may have to sell portions of the unit in Latin America, Southeast Asia and South Africa. However, the agreement may not be considered final as last minute hurdles could affect the deal.
Last July, Pfizer has put its animal health and nutrition businesses for sale as a part of its strategy to focus more on drug development, after losing patent protection for cholesterol drug Lipitor, which affected its net income.
The infant nutrition business, which became a part of Pfizer following its acquisition of Wyeth in 2009, sells baby formula and maternal supplements and owns formula brands such as SMA Gold and Promil Gold.
The business, which generates 70% of its sales from emerging markets, has revenues of $2.1bn and has been growing at 8% annually. It faces competition from Danone, Nestlé, Mead Johnson and Abbott Laboratories.
Meanwhile, Pfizer has hired JP Morgan Chase, Bank of America Merrill Lynch and Morgan Stanley for an initial public offering of the animal health division.
