Danone in talks to sell medical nutrition unit to Hospira - FT

PARIS, July 27 Sun Jul 27, 2014 2:10pm EDT

PARIS, July 27 (Reuters) - French dairy group Danone is in talks to sell its medical nutrition business to U.S. group Hospira in a deal valuing the unit at about $5 billion, the Financial Times reported on Sunday, citing people familiar with the situation.

The business paper said on its website that no deal was certain and that the talks were ongoing.

Contacted by Reuters, a spokesman for Danone in Paris declined to comment. No one at Hospira immediately returned a request for comment.

The deal would allow the U.S. buyer to move its tax base to Europe, the FT said, a practice known as "inversion" criticised by President Barack Obama.

Danone, the world's largest yoghurt maker posted a worse-than-expected fall in first-half operating profit last Friday after sluggish sales of baby food in Asia and dairy products in Europe took their toll.

Danone's challenges have refocused analysts' attention on its relatively small size compared to giants such as Swiss rival Nestle. Analysts have cited Nestle and Pepsico as the most likely potential buyers. (Reporting by Michel Rose, editing by David Evans)