NEW YORK CITY (dpa-AFX) - Swiss baby food company Nestle SA (NSRGY.PK) and French food processor Danone SA (DANOY.PK) are vying for healthcare giant Pfizer, Inc.'s (PFE) infant nutrition business that could be worth about $10 billion, according to a Bloomberg report on Thursday. The two bidders are reportedly seen as the frontrunners after the first round of bidding.
The auction process for the business unit that reportedly started in November saw a number of potential buyers, such as Mead Johnson Nutrition Co. (MJN), H.J. Heinz Co. (HNZ) Abbot Laboratories (ABT), and Chinese milk producer Mengniu Dairy Co.
Pfizer has been in the process of exploring strategic alternatives for its Nutrition business, along with its Animal Health business, in order to focus on its core biopharmaceutical products. It announced the ongoing process in early July 2011 and was considering options including, among others, a full or partial spin-off the businesses, sale or other transactions.
Pfizer also engaged Morgan Stanley and Centerview Partners' advisory business at that time in connection with the evaluation of strategic alternatives for its Nutrition business. Pfizer had said that it expects to complete any transactions that may result from these evaluations in 12 to up to 24 months.
Pfizer could still look to spin-off the business into its own separate company, if it fails to fetch the price it's seeking for the unit.
Pfizer is the second-largest in infant nutrition business after market leader Nestlé, while Mead Johnson is China's leading infant food maker. Meanwhile, analysts had always considered Danone, and Nestlé as the strongest to acquire the Pfizer unit.
New York-based Pfizer has been reviewing the business since February 2011 as it was looking to shed some of its non-core assets since it completed the $68 billion takeover of Wyeth in October 2009.
Pfizer Nutrition, a leader in infant and pediatric nutrition, was acquired as part of its takeover of Wyeth. Its core brands include SMA Gold, Promil Gold, Progess Gold, and S-26 Promise Gold. The unit also produces vitamins for pregnant women, and generated total revenues of about $1.9 billion in 2010.
Pfizer Nutrition, formerly Wyeth Nutrition, develops premium-quality nutritional products that are scientifically designed to help meet the needs of infants and young children up to seven years old, as well as pregnant and lactating mothers.
The business has operations on six continents, products available in more than 60 countries, and a focused presence in key markets throughout Asia, the Middle East, Europe and Latin America, with China, Philippines, the U.K., Mexico and Australia being among its top markets. Its manufacturing facilities are located in China, Ireland, Mexico, the Philippines, and Singapore.
PFE closed Thursday's regular trading session at $21.99, up $0.09 or 0.41 percent on a volume of 27.36 million shares.
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© 2012 AFX News
