Nestle to buy Pfizer nutrition unit


Swiss food and nutrition giant Nestle plans to shell out $11.9 billion to buy Pfizer’s nutrition unit, whose products include baby formula brands SMA and Promil.

The division is expected to reel in $2.4 billion in sales this year and gets 85% of its revenue from emerging markets, whose large and rapidly growing populations are a key target for Nestle.

Pfizer has the fifth-largest infant formula business in the world, according to research group Euromonitor International, ranked behind Nestle, Mead-Johnson Nutrition Co., Groupe Danone and Abbott Laboratories, respectively.


Nestle, which last year ranked as the most profitable corporation in the Fortune Global 500, owns infant product brands Gerber, Cerelac and Nan.

Infant nutrition specifically is “a very attractive category,” both “high-value and high-growth,” said Nestle’s head of nutrition, Kurt Schmidt, in a conference call with analysts Monday. The nearly $30-billion market is growing at a 10% rate as affluence and awareness increases abroad, helping the company make its products more diverse and high end, he said.

Nestle Chief Executive Paul Bulcke, in the conference call, said the Pfizer nutrition unit “has a very strong brand portfolio. It has very good R&D capabilities, it has a very good geographical presence and it actually helps to enhance our competitive advantages.”

Emerging markets have been an expansion area for Nestle.

Last week, the company said its first-quarter sales were up 7.2% to 21.4 billion Swiss francs, or $23.3 billion. Growth was up 3.1% in developed markets such as North America, where expansion slowed because of weak consumer sentiment and higher pricing for products such as frozen foods.

But in emerging markets, sales were up 13%.

“In many developed markets where consumer confidence is low, the trading environment is subdued whilst in most emerging markets, conditions remain dynamic and rich in growth opportunities,” Bulcke said in a statement when the earnings were released.

Overall first-quarter Nestle Nutrition sales, including infant formula and cereals, grew 5.8% to 1.9 billion Swiss francs, or $2.1 billion. Even slower or declining birth rates in developed markets didn’t dampen “dynamic growth in Asia, Africa and Latin America,” the company said.


The Nestle-Pfizer deal will need regulatory approval.

Pfizer shares fell 18 cents to $22.38.