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Nestle Near Deal To Buy Pfizer Baby Food Business: Reports

Posted: 04/18/2012 3:05 pm Updated: 04/18/2012 3:26 pm

Nestle Pfizer Baby Food
Nestle chief executive Paul Bulcke presents the group's quarterly results on Oct. 20, 2011. Nestle is close to a deal to buy Pfizer's baby food business, according to reports.

Nestle might soon be be feeding a lot more babies.

The world's largest food and nutrition company is in final talks to buy Pfizer's infant nutrition business for between $9 and $10 billion, according to a report by Reuters. Deal talks were first reported on Tuesday by the Wall Street Journal.

The deal would give the Switzerland-based Nestle a major presence in Asia's baby food market, where Pfizer is a strong player, according to Jon Cox, analyst at the Swiss bank and brokerage firm Kepler Capital Markets. And Asia's market represents about half of the global infant nutrition business, Cox told The Huffington Post.

"So this is a deal for Nestle to strengthen its position," Cox said. "It would become the clear leader in Asia in this important market."

Neither Nestle nor Pfizer returned a request for comment.

According to Bloomberg, the French company Danone has also been vying for the Pfizer business.

The new deal, which could be finalized by the end of April, could give Nestle about 10 percent of the infant formula market in China, according to Bloomberg. And that's during a year when China is said to be expecting a sort of baby boom, with an estimated 5 percent increase in its birthrate, according to the BBC, which cites a December report by China's state-run Xinhua news agency.

The benefits of buying into China's baby-food market seem pretty clear for Nestle, then. So why would Pfizer be selling? Bloomberg noted that the company is trying to focus its energies on developing new drugs to make up for the money it's losing, now that it no longer has patent protection for its cholesterol drug Lipitor.

The deal will likely have little impact for American consumers of baby food and related products, according to Cox. Nestle already has a strong position in the U.S. market with its Gerber brand. But the deal highlights the importance of the baby food business worldwide.

"There's a lot of focus on babies and what they eat," he said. "It's a pretty hot topic."

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