Nestlé beats Danone to Pfizer baby-food takeover

By Freddie Dawson

- Last updated on GMT

Nestlé acquired Pfizer in a £7.35bn deal
Nestlé acquired Pfizer in a £7.35bn deal

Related tags: Health, Marketing, Nutrition

KitKat maker Nestlé has beaten rival manufacturer Danone in the takeover battle for baby-food business Pfizer Nutrition after agreeing an offer of £7.35bn ($11.85bn) for the firm.

Nestlé has emerged victorious in the battle to dominate the lucrative baby-food sector and now claims to be the leader for infant nutrition in emerging markets.

Paul Bulcke, Nestlé chief executive said: “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​.”

Competitive advantages

The deal, which is subject to regulatory approval, will also allow Nestlé to “leverage competitive advantages​” and is part of its overall strategy to be the world leader in nutrition, health and wellness, he added.

Pfizer Nutrition currently has a strong presence in markets such as China, Indonesia and the Middle East. Nestlé estimates its sales will be worth £1.49bn in 2012.

Emerging countries account for 73% of the £18.58bn valued infant nutrition market, according to market intelligence firm, Euromonitor.

The value of the bab-food sector is also expected to grow at an annual rate of 13% in these countries.

The purchase will also complement Nestlé’s existing infant nutrition brands geographically as well as in research and development, according to Kurt Schmidt, head of Nestlé Nutrition.

Strengthen sales

Nestlé is already the leader in 75% of world markets and the firm claims that Pfizer Nutrition’s Chinese presence will help strengthen sales in an area that is predicted to account for 45% of the growth in infant nutrition sales over the next five years.

Schmidt added: “The acquisition gives us a pole position for future growth by being well placed to benefit from growing demographic and market trends​.”

Pfizer Nutrition is the manufacturer of brands such as S-26 Gold, SMA and Promil. It put its infant nutrition and animal health operations up for sale last year as part of its plan to focus on its core pharmaceuticals business.

Danone was unavailable for comment at the time of publication.

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