It looks as if Nestlé has prevailed in the bidding for Pfizer's nutrition unit. Sources tell The Wall Street Journal that the Swiss food company is close to snapping up the business for at least $9 billion. It would be the latest of Pfizer's planned selloffs or spinoffs, part of a restructuring plan that's the centerpiece of CEO Ian Read's (photo) tenure so far.
Besides Nestlé ($NSRGY), Pfizer ($PFE) had been entertaining offers from Danone and Mead Johnson Nutrition (itself an ex-Bristol-Myers Squibb company) in auctioning off the unit. The two companies reportedly were working on a joint bid. Of course, till the deal is done, anything can happen, as the WSJ's sources were quick to point out.
The nutrition unit's penetration in China is one of its chief selling points. Some 70% of its sales--$2.1 billion last year--are generated in emerging markets. More than one-fourth comes from China. Some analysts had been projecting a sale price of more than $10 billion, while others pegged the price at $8 billion.
Meanwhile, Pfizer is moving ahead with plans to spin off its animal health business; the company tapped JPMorgan Chase, Bank of America Merrill Lynch and Morgan Stanley to lead an initial public offering, the WSJ's sources say. It's expected to file IPO documents this summer. But with bidders apparently circling--Novartis ($NVS) reportedly lodged a bid already, and Bayer put in a preliminary offer--a sale could be possible, too. That unit could be worth $16 billion or more.
The sales began with Capsugel, which KKR picked up in August for $2.4 billion. But that deal was already in the works when Read announced his plans to divest the nutrition and animal health units, but hold onto generics and consumer health. Some analysts and investors had been hoping for a more dramatic bust-up. In fact, Citi analyst Jami Rubin recently took up the cry for a full-scale split again, after a meeting in which Read said he'd be open to shedding more divisions if the conditions were right.
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