Nestle to Buy Novartis Nutrition Unit for $2.5 billion

nestleNestle SA, the world's biggest food and drink company, will buy the medical nutrition unit of pharmaceutical company Novartis for $2.5 billion, the companies said Thursday.

Nestle will acquire such brands as Boost and Resource nutritional supplements, and Optifast dieting products. There had been media reports that Nestle might also acquire Gerber Products, Novartis' baby-food unit, but the deal does not include that unit.

The deal still needs to be approved by regulatory authorities but is expected to be completed during the second half of 2007, Nestle said in a statement.

"I am very pleased that this acquisition allows us to become a very strong player in the strategic core category of nutrition," said Chairman and Chief Executive Peter Brabeck-Letmathe. "This is a very important step for the Nestle Group in its strategic transformation process to a nutrition, health and wellness company as it strengthens the core of our globally managed Nestle Nutrition business."

Nestle shares rose 2.2 percent to close at 439.25 Swiss francs ($365.46) in Zurich, while shares of Novartis gained 1.78 percent to 71.35 Swiss francs ($59.36).

"Following our long-term strategy, this divestment continues to enhance our focus on health care," Novartis Chairman and CEO Daniel Vasella commented in a statement, adding that it would strengthen the company's financial position and strategic flexibility.

Nestle said the 2,000 Novartis employees currently working at the medical nutrition unit in Gland, Switzerland, will join the company, increasing its research and development capacity.

With expected sales of about $950 million, Novartis Medical Nutrition was the world number two in its field in 2006.

via CBS news