Nestle buys Novartis Medical Nutrition in long-awaited deal

By Alex McNally

- Last updated on GMT

Related tags: Nestle, Health, Gerber products company

Nestlé today confirmed the successful take-over of Novartis Medical
Nutrition in a deal worth US$2.5bn - and one which will catapult
the Swiss firm into the top end of the medical foods market.

The firm announced its interest in December, after months of speculation that it was eyeing up the unit as a springboard from a minor player in the medical foods market to the world number two. In addition to bolstering Nestlé's health and nutrition division, a major area of focus and investment, the deal comes with 2,000 workers whose expertise will boost Nestlé's R&D capability. A company spokesperson said this morning that the buy out would strengthen Nestlé's Healthcare Nutrition. He said: "The combination of the two in over 40 countries increases Nestlé's capabilities to satisfy the needs of consumers with special nutritional requirements." ​ The company added that the deal will create a product portfolio "covering all disease specific cases where special nutrition is needed."​ Nestlé also confirmed earlier this year an interest in buying Novartis' Gerber baby foods business, and is aiming to increase sales from its nutrition division by 10 per cent. The latest available statistics for the firms' nutrition division, which is made up of baby's development, performance, and healthcare interests, reported sales of CHF4.3m (€2.7m) in the first nine months of the 2006 to 2007 fiscal year, up from CHF 3.8m (€2.4m) for the prior year period. A deal to sign Novartis Medical Nutrition has been subject to regulatory approval by the European Commission. Earlier last month the commission extended the deadline for its decision on Nestlé's proposed buy of Novartis' medical nutrition to allow time for responses on proposed remedies to competition issues. However, the precise nature of the competitive problems and the mooted solutions has not been communicated and the deadline expired last Friday. The long-awaited deal has been heralded by Nestlé's chief executive Peter Brabeck-Letmathe as helping transform the company's approach to health and nutrition. He said: "I am very pleased that this acquisition allows us to become a very strong player in the strategic core category of nutrition. … This is a very important step for the Nestlé Group in its strategic transformation process to a nutrition, health and wellness company as it strengthens the core of our globally managed Nestlé Nutrition business."​ An agreement to sign Gerber for $5.5bn has not yet been sealed.

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