Pfizer expect to sell the infant nutrition division to Nestle in the coming days

Pfizer, Inc. is reported to sell its infant nutrition division to Swiss-based conglomerate Nestle SA. The deal is kept under veil and only rumours from some credible sources are out. Both the officials at Nestle and Pfizer have failed to comment on the deal.

The resources, who have not mentioned their names due to the private nature of the deal, have revealed that the department has been bid on by Nestle and Danone SA, for $11 Billion. However, the America drugs manufacturers have chosen to sell the division to the Swiss giants.

Nestle are still the top sellers of the infant nutrition products and the addition of the Pfizer-created division that boasts products like SMA and Promil, will be profitable. The division is a hit in China and holds almost 7 percent share among other Pfizer products. Nestle had to discard sale of its infant products after authorities detected excessive amounts of iodine in the products.

China, among other products, is a billion-dollar infant nutrition products’ market. Last year, the country accounted for 23 percent 30.9 billion euro ($41 billion) market, globally. Therefore, the acquisition of the Pfizer-based division will be a profitable and beneficial addition to the company.

“This deal makes huge strategic sense for Nestle,” Andrew Wood, an analyst at Sanford C. Bernstein, wrote April 18 in a note to clients. “It is in the right categories and the right markets and with a reasonable price we would expect a fairly positive reaction from investors.”

Pfizer had the fifth-largest global market share of the infant formula business in 2010, trailing Nestle, Mead-Johnson Nutrition Co. (MJN), Danone, and Abbott Laboratories, according to Lee Linthicum, an analyst with Euromonitor in London.

The market is even stronger in the Middle East and Asia-Pacific regions, where Pfizer division is the third and fourth largest, respectively.

The global sales are expected to gain profitability in the next five years due to the increasing population and the increasing concerns of the parents about their infants’ health.

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Posted by Usman Khalid on Apr 23 2012. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.