Nestlé receives China’s clearance for Pfizer unit acquisition

Swiss food company Nestlé’s $11.85bn deal to acquire Pfizer’s infant nutrition business has received approval from the Chinese Ministry of Commerce, bringing the company closer to completing the acquisition.

Nestlé beat out companies such as Groupe Danone and Mead Johnson to seal the agreement in April 2012.

The company, however, has had to receive approval from anti-trust bodies in several countries in order to close the acquisition.

It may have to divest parts of the business in the Middle East, Asia and Latin America, in order to overcome anti-trust issues – a process which may take up to a year, according to analysts.

Nestlé chief executive Paul Bulcke said that although it was necessary to receive approvals from other countries, receiving clearance from China was very important.

The completion of the deal, which also recently received approval from the Indian competition authorities, will allow Nestlé to strengthen its presence in the Asian baby food market and become a leading baby food producer in China.

The infant nutrition business, which became part of Pfizer following its acquisition of Wyeth in 2009, sells baby formula and maternal supplements and owns formula brands such as SMA Gold, S-26 Gold and Promil Gold.

It generates 70% of its sales from emerging markets and has revenues of $2.1bn with an annual growth rate of 8%.

Pfizer is divesting the infant nutrition business as part of its strategy to focus on drug development, after losing patent protection for cholesterol drug Lipitor, which affected its net income.

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Image: Nestlé intends to strengthen its presence in the Asian baby food market with the acquisition of Pfizer’s infant nutrition business. Photo courtesy of Nestlé.