Nestle confirms $5.5 bln Gerber buy from Novartis

ZURICH (Reuters) - Nestle SA NESN.VX, the world's largest food company, confirmed a $5.5 billion cash deal to buy U.S. baby-food maker Gerber from Novartis AG NOVN.VX, furthering its push into the nutrition business.

A Nestle logo is pictured on a truck before the 2006 full year results conference at the company headquarters in Vevey, February 22, 2007. Nestle SA, the world's largest food company, confirmed a $5.5 billion cash deal to buy U.S. baby-food maker Gerber from Novartis AG, furthering its push into the nutrition business. REUTERS/Denis Balibouse

Nestle said on Thursday the deal would give its growing nutrition division -- which includes infant formula, baby food, medical nutrition, weight management and performance nutrition -- annual sales of around 10 billion Swiss francs ($8.21 billion).

Gerber, a household name in the United States, will generate an estimated $1.95 billion in net proceeds from sales in 2007, Nestle said.

Although Nestle is the world’s biggest maker of infant nutritional products, it had lacked a baby food brand in the U.S. and has been keen to buy Gerber for more than a decade.

An acquisition of Gerber would continue Nestle’s push into health and nutrition. Nestle recently bought the medical nutrition business of Novartis for $2.5 billion, but that deal did not include Gerber.

Novartis said the sale marked the end of a campaign to sell off non-healthcare related operations and a transition to a group focused 100 percent on the healthcare business.

Swiss-based Novartis, the world’s fourth-biggest pharmaceuticals company, said it planned to complete the sale of the Gerber unit in the second half of 2007.

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“This completes Novartis’ divestiture program following its strategy to focus on healthcare with pharmaceuticals at the core,” Novartis said in a statement.

The sale means Novartis will now generate 100 percent of its revenue from the healthcare business, compared to 45 percent in 1996. Novartis makes drugs such as Diovan for hypertension and Glivec for leukemia.

Swiss-based Nestle, which makes Nescafe coffee, KitKat chocolate wafer bars and Perrier bottled water, first tried to buy Gerber in the early 1990s, but lost out to Sandoz, which later became part of Novartis.

A Nestle purchase of Gerber has been widely expected by analysts, who predicted the unit would fetch in the range of $5 billion to $6 billion.