Global food giant Nestle has agreed to acquire the entire medical nutrition business of Novartis for a total sum of US $2.5 billion, as part of its effort to reinforce the group’s position in the nutrition arena.
The move propels Nestlé into a strong number two position in the fast growing and profitable healthcare nutrition segment, where Nestlé has traditionally played only a minor role. Through this acquisition Nestlé also strengthens its existing R&D capability, helping to accelerate the growth of the nutrition business.
With sales of about US $950 million in 2006, Novartis Medical Nutrition is the worldwide number two player in its sector. The firm’s location and products are complementary to Nestlé’s healthcare nutrition business. The combination of both companies offers a product portfolio covering all disease specific cases where special nutrition is needed. As a result of this, Nestlé does not expect the acquisition to have any material impact on group earnings in the short term.
As a result of the acquisition, about 2000 employees of Medical Nutrition will join the Nestlé Group, boosting Nestlé’s R&D research capability and providing better access to medical institutions. The transaction, which is expected to be completed during the second half of 2007, is subject to regulatory approval.
Peter Brabeck-Letmathe, chairman and CEO of Nestlé, said: “This acquisition allows us to become a very strong player in the strategic core category of nutrition. I welcome the people from Novartis who will strengthen our capability in healthcare nutrition, including specific R&D. This is a very important step for the Nestlé Group in its strategic transformation to a nutrition, health and wellness company as it strengthens the core of our globally managed Nestlé Nutrition business.”For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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