Nestlé hints at interest in Novartis foods

- Last updated on GMT

Related tags: Switzerland, Nutrition, Nestlé

The Swiss food giant has confirmed its interest in some of
Novartis' functional foods, part of the unit put up for sale
earlier this year. Analysts speculate that the food group could
easily afford to buy the drug company's functional food unit.

Swiss food group Nestle confirmed its interest in some Novartis cereal brands as speculation mounted that the company is among the last bidders for the drug firm's health and functional food unit, reports Reuters.

The Novartis unit, put up for sale in February in a bid for Europe's third largest drugs firm to sharpen its focus on healthcare, includes the Ovaltine drink, sports drink Isostar and health food and slimming products Cereal and Gerble.

"We have stated quite clearly that Ovaltine is not a product that has any certain priority for Nestle. We have also said that if there was an interest it would be more in the area of the cereals and nutritional foods,"​ Nestle spokesman Francois Perroud told Reuters.

Britain's Sunday Telegraph newspaper reported that three bidders, Nestle, and private equity players Legal & General Ventures and Electra Partners, are in an auction organised by Credit Suisse First Boston and that a decision was expected in four weeks. Novartis however refused to comment.

Despite the current economic downturn, the world's largest food group has been on a buying spree. Last week, Nestle said it would buy privately-held Chef America for $2.6 billion (€2.6bn) and it has also been linked with bids for Hershey Foods (valued at up to $12 billion) and Pfizer's Adams unit. Analysts commented that the company could afford all three deals.

Perroud said however : "We are not going to comment on each and every rumour that crops up. I am quite busy saying 'no comment' at the moment."

Novartis's health and functional food unit had sales of SF850 million (€581m) in 2001. Analysts said the unit could fetch around two times its sales, or some SF1.7 billion - a minor deal for cash-rich Nestle.

Nestle shares have fallen by around 7 per cent this year, in line with European peers but have gained in the last few sessions on talk of the Hershey bid as well as on Nestle's insistence it wants to regain its top-selling Kit Kat brand in the United States, currently made by Hershey under licence.

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