Swiss food giant Nestle to buy Pfizer’s infant nutrition business for $11.85 billion

Swiss food giant Nestle said today it has agreed to buy Pfizer’s infant nutrition business for $11.85 billion, as it seeks to increase its slice of the fast-growing emerging markets in Asia and the Middle East, the Associated Press reported.

Nestle chief executive Paul Bulcke said in a statement that Pfizer’s “strong brands and product portfolio” and its solid presence in emerging markets — which account for 85 percent of its sales –would “complement our existing infant nutrition business perfectly”.

The Financial Times said the deal would take several months to clear regulatory hurdles around the world.

Nestle was paying a high price for the Pfizer unit — 19.8 times its pretax profit for 2012 – and analysts said the higher-than-expected price tag would take the gloss off the deal in the short term, according to the New York Times.

“Although the growth profile, attractive margins and emerging market exposure makes this a compelling asset,” Robert Dickinson, a Citigroup analyst, said in a research note to investors, “we believe that the multiples being some way ahead of market expectations may dampen near term enthusiasm for the deal.”

Nestle's bid trumped a rival offer by France’s Danone, Bloomberg said.

Pfizer, the world’s largest drug maker, is also selling its animal health business unit as it seeks to focus more on developing new drugs.

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