As expected, Nestlé has prevailed in the steeplechase for Pfizer's ($PFE) nutrition unit. The price, however, was better than expected: $11.85 billion, rather than the $10 billion estimated by analysts. All the more cash for Pfizer to share with investors and invest in its core pharma business.
The nutrition-unit sale comes as Pfizer is readying a spinoff of its animal health business. The drugmaker announced its plans to shed both units last summer as part of a restructuring designed to streamline the company and focus attention on its branded-drug nucleus.
"The sale of the nutrition business to Nestlé is consistent with Pfizer's intention to generate the greatest value for shareholders by maximizing the value-creation potential of our businesses and prudently managing our capital allocation," CEO Ian Read said in a statement.
Jefferies analysts figure Pfizer might use the sale proceeds to fund "larger acquisitions, such as Bristol-Myers and the Abbott Pharma spin-off," Reuters says. Abbott, you'll recall, recently announced that it would hive off its drug business into a standalone company dubbed AbbVie.
The Nestlé money will be followed by billions more from the animal-health spinoff; Pfizer is reportedly preparing to file IPO documents for the business later this year. The veterinary business is bigger than the nutrition unit--with double the revenue, at $4.2 billion--and as such is expected to add even more to Pfizer's coffers. Novartis ($NVS) is said to have made a $16 billion offer that Pfizer rejected. More recently, a sale to Bayer was pegged at as much as $18 billion. Whether more sales or spinoffs are to come is open to debate; Read has reportedly said he's open to the idea.