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Pfizer sells nutrition unit to Nestle, as GSK offloads more OTC

Nestle wins bidding war for Pfizer business and GSK reaches deal with Aspen Pharmacare

Pfizer has reached an agreement to sell off its nutrition business to global food giant Nestle for $11.8bn, a much higher price than anticipated, after what appeared to be a last-minute bidding war.

The US pharma giant put Pfizer Nutrition up for sale last July, and at the time analysts speculated that it could raise $8-$9bn from the unit, which made revenues of $2.1bn last year.

The much-higher price tag likely reflects the fact that Nestle and rival Danone were both desperate to get their hands on the business thanks to its strong position in fast-growing emerging markets, particularly China.

Around 85 per cent of Pfizer Nutrition sales are made outside of the US, Europe and Japan, with a high proportion coming from Asia, Africa and the Middle East.

Nestle said the deal will help boosts sales of its infant formula lines from $5bn to $7bn  and cement its position as the biggest company in infant nutrition.

"The transaction is a testament to the success of the nutrition business, including its excellent reputation, talented colleagues, high-quality products and market reach," commented Amy Schulman, president of Pfizer Nutrition. The company expects the deal to close in the first half of 2013.

Pfizer has also been looking into a possible sale of its animal health operations but is now said to be planning an initial public offering for the business, which has annual revenues of around $4.2bn.

GSK's £164m OTC deal

Meanwhile, GlaxoSmithKline has reached an agreement to offload more of the over-the-counter (OTC) medicine portfolio it has had up for sale since February 2011.

It will sell a set of brands that includes Phillips MOM, Solpadeine, Dequadin, Cartia and Zantac with annual sales of around £60m ($97m) to Aspen Pharmacare for £164m ($265m) in cash. The deal is expected to close in the second quarter.

Last month, GSK sold a £391m ($631m) block of OTC products including Lactacyd, Abtei, Solpadeine, Zantac, Nytol and Beconase to Belgian company Omega Pharma, which also picked up a manufacturing site in Herrenberg, Germany, and late last year Prestige Brand Holdings paid £426m ($688m) for a number of brands, including GSK's aspirin Ecotrin, pain reliever BC and heartburn treatment Tagamet.

But the pharma company is still waiting to find a buyer for weight-loss brand Alli (orlistat) as it tries to resolve a third-party supply interruption.

24th April 2012

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