Nestle sells Novartis nutrition in Spain and France

By Alex McNally

- Last updated on GMT

Related tags European union Digestion Nestlé

Nestle has agreed to sell parts of Novartis Medical Nutrition to
Fresenius for an undisclosed sum, just months after buying the
company for some €1.7bn

The firm said the takeover of Novartis this summer was an important step in the " strategic transformation process to a nutrition, health and wellness company" and would propel them to the top end of the medical foods market.

But the EU said in order for the deal to go ahead Nestle would have to sell parts of the company.

Nestle spokesman François-Xavier Perroud said business activities "overlapped" in France and Spain and needed to be divested.

Nestle will keep hold of the "vast majority" of Novartis and the sale is not expected to impact Nestle's plans.

Perroud added: "In the grand scheme of things this won't even be noticed."

Fresenius, which will buy Novartis' interest in France, is also buying Nestlé's nutrition business in Spain - Nestle Healthcare Nutrition.

The German firm said the acquisitions will strengthen its fast-growing segment of clinical nutrition and will " significantly expand " its market position in France and Spain.

Both companies have agreed not to disclose the purchase price and the transaction is expected to close in 2007.

Fresenius hopes the purchase will allow the company to become the second largest provider of enteral nutrition products in France, and provide access to the Spanish enteral nutrition market.

In 2007, the businesses are projected to achieve combined sales of approximately €55m. A strategic analysis of the European enteral nutrition market by Frost & Sullivan this August reports that the market was worth €795m (£536m) in 2005.

This is anticipated to grow to €1,322m (£891m) by 2012, equivalent to a compound annual growth (CAGR) of 7.5 per cent for the sector.

Enteral nutrition refers to the delivery of macro- and micronutrients to the gastrointestinal tract of people who are unable to tolerate oral food, such as people with cancer patients or people with kidney problems.

Two types of enteral nutrition formulae exist - the polymeric formulae that contain partially digested ingredients, and the monomeric formulae that contain pre-digested ingredients.

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