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Apr 23, 2012

Nestle Targets Global Infant Formula Market, Acquires Pfizer's Unit In $11.85B M&A

$11.85B Global Infant Formula Deal Largest European Merger & Acquisition Ever

Nestlé’s has set its financial aim on the global infant formula market with the acquisition of the Pfizer's  global infant formula unit.  Terms were agreed to on 23 April 2012.  The price tag was US$11.85 billion setting a new record for the largest merger and acquisition (M&A) ever by a European company. 
Pfizer's infant formula product line.  Photo: Pfizer
The deal will be finalized in June 2013 pending regulatory approval.  Terms of the deal were negotiated with advice from Morgan Stanley, Centerview Partners and the law firms Skadden, Arps, Slate, Meagher & Flom, Clifford Chance and DLA Piper (representing Pfizer) and Rothschild and the law firm Mayer Brown (advised Nestlé).  According to the New York Times, "the merger may bring up some difficult anti-trust issues requiring Nestlé to sell some businesses, particularly in Latin America, to win regulatory approval."

Pfizer is the world's largest drug company.  Its focus is developing new prescription drugs.  It acquired its global infant formula unit when it purchased Wyeth in 2009 for US$68 billion.  Aside from Nestlé, French based Danone was interested in purchasing Pfizer's global infant formula unit.  

Nestlé's acquisition of Pfizer's global infant formula unit will give it greater access to emerging market.  It will also create marketing ties between Nestlé's baby food unit and global infant formula unit.  Nestlé's baby food unit is based in part on its purchase of the Gerber brand in 2007 for US$5.5 billion.  Pfizer's global infant formula market generates 85% of its revenue from developing countries.

According to Euromonitor International, with this M&A, 
Nestlé will hold approximately 10% in China's baby food market and 38% in the Middle East and Africa.  The global baby food market and global infant formula market are both expected to grow 10% annually between 2012 and 2016, with most of the growth in the developing world.  

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About Margaret

CEO and Curator (The Food Museum) | Managing Director and Chief Editor (GR2 Global LLC) | Educator (UCLA PhD) | Researching and writing on global food issues, nutrition and health, sustainability, history (preservation), conservation (natural resources), and design.
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