Pfizer is to sell its nutrition business to Nestlé in a deal worth $11.85 billion (€9 billion).
The move follows a strategic review of the business about nine months ago. Pfizer Nutrition recorded revenues of $2.1 billion in 2011, up 15 per cent on 2010 figures.
Pfizer Nutrition manufactures and develops everyday and speciality infant and toddler formulas, follow-on formulas, as well as maternal and adult nutrition products. It has operations in about 60 countries around the world, including Ireland.
Established in 1974, the Askeaton, Co Limerick, operation employs 600 people and produces a range of products for babies and young children, including SMA and Promil. It exports infant formula to more than 65 countries across Europe, Middle East, Africa, Latin America, Asia and Australia/New Zealand
It is not yet known what impact the sale will have on employment at the plant in the future. However, Pfizer said all employees currently involved in the nutrition business will be transferred to Nestlé, with consultations to take place where required.
The Limerick facility is the only plant in Pfizer Nutrition that produces ready-to-feed liquid products, and it also produces a range of specialty products for specific nutrition needs. It is also the co-location for the global Pfizer nutrition business’s product development function.
Pfizer employs more than 4,000 people at its operations in Cork, Dublin, Kildare and Limerick, and recently invested some $200 million in its Grange Castle biopharmaceutical site.
Nestlé beat out French rival Danone, with the price escalating sharply from bids around $10 billion after Danone was reported to have raised its offer on Friday.
"The deal makes strategic sense, it really was Nestle's deal to lose as it very much wanted to add to its Asian business and boost growth and margins," said Kepler analyst Jon Cox.
"The price being paid seems quite high, by my calculations it's at 22 times core earnings, almost as high as Danone's infamous 2007 acquisition of Numico."
Danone paid €12.3 billion in 2007 for Dutch food group Numico, at the time Europe's largest baby food producer, paying a similar multiple, a price many analysts said was too high.
This acquisition, which is subject to regulatory approval, is expected to close in mid 2013 and will help Nestle extend its lead in the infant formula market.
