Pfizer sells nutrition business to Nestlé for $11.9 billion
pharmafile | April 23, 2012 | News story | Business Services, Sales and Marketing | Business, Lipitor, Pfizer, nestle, nutrition
Pfizer has sold its nutrition business to Nestlé for $11.85 billion in cash.
Pfizer Nutrition is a leading global pediatric nutrition company with a portfolio of infant and toddler formulas, follow-on formulas, as well as maternal and adult nutrition products.
It has been looking to sell the business for nearly a year, as it looks to re-focus on delivering returns for shareholders. Pfizer’s Nutrition business has been doing well, and recorded revenues of around $2.1 billion in 2011, an increase of 15% versus 2010.
But Pfizer has recently lost its blockbuster statin Lipitor, which was making sales of over $13 billion a year at its peak. The Nutrition business simply isn’t bringing in the numbers to help offset this loss, and Pfizer will want to turn its attentions to areas with higher growth and revenue.
Pfizer expects the divestiture of the Nutrition business will be completed by the first half of 2013. Upon completion of the transaction, all Pfizer colleagues currently working within the Nutrition business will be transferred to Nestlé, subject to works council and unions.
Ian Read, Pfizer’s chairman and chief executive, said: “The sale of the Nutrition business to Nestlé is consistent with Pfizer’s intention to generate the greatest value for shareholders by maximising the value-creation potential of our businesses and prudently managing our capital allocation.
“We remain focused on enhancing shareholder value and, following the completion of this divestiture, we expect to allocate the after-tax proceeds to further share repurchases, or invest in other business development opportunities, with the return on share repurchases remaining our case to beat.”
Nestlé who outbid French food group Danone to the deal, will pay $11.85 billion in cash for the business, but some analysts have queried that cost.
“The price tag is high, however Nestlé is securing a high growth/margin business with high exposure in the emerging markets,” said Vontobel analyst Jean-Philippe Bertschy.
Amy Schulman, president and general manager of Pfizer Nutrition, said: “The transaction is a testament to the success of the Nutrition business, including its excellent reputation, talented colleagues, high-quality products and market reach.
“The combination of Nestlé and Pfizer’s Nutrition business, with its leading position in emerging markets, portfolio and science, will continue to serve the needs of formula-fed infants and their healthcare professionals and caregivers,” she added.
Pfizer will update its 2012 financial guidance to reflect its decision to divest the Nutrition business to Nestlé when it reports its first-quarter financial results on 1 May, 2012.
Ben Adams
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