12 April 2007
Nestle deals for Gerber
There were no baby steps in this deal, as Nestle SA said it will pay $5.5 billion to pick up U.S. baby-food giant Gerber from Novartis AG.
Nestle said as a result of today’s deal, its nutrition division will now have annual sales of $8.21 billion.
Gerber, which has been making baby food since 1928, should bring in $1.95 billion in sales this year.
Nestle said its goal was to expand Gerber operations globally.
“This is like an iceberg where you only see the tip of it,” Richard Laube, head of the nutrition division, said in a conference call.
Nestle has lacked a baby food brand in the U.S. and has been eager to buy Gerber for more than a decade.
Nestle just bought Swiss-based Novartis’s medical nutrition business for $2.5 billion.
“The acquisition of Gerber is the perfect complementary fit. It not only gives Nestle the leadership position in baby food, but it also constitutes a decisive step to establish Nestle Nutrition as the undisputed global leader in the nutrition field … covering all important sectors: infant formula, baby food, medical nutrition, weight management, and performance nutrition,” said Peter Brabeck-Letmathe, Nestle chairman and chief executive.
Novartis, the world’s fourth-biggest pharmaceuticals company, said this deal solidifies the company to a pure healthcare group.
After the sale, Novartis will generate all its revenue from healthcare as compared to 1996 when the segment accounted for 45% of its revenue.
Nestle, the maker of Nescafe coffee, KitKat chocolate bars, and Perrier water, first tried to buy Gerber in the early 1990s, but lost out to Sandoz, which later became part of Novartis.
The deal should close in the second half this year, officials said.
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