Three months after
announcing a strategic review of its Mead Johnson baby formula unit, pharmaceutical giant Bristol-Myers Squibb reportedly has ratcheted up the sale process. Bristol Myers, which is asking $7 billion to $9 billion for the unit best known for the Enfamil brand, reportedly has contacted food giants PepsiCo, Danone, Nestlé, Kraft and Heinz, and pharma rivals Johnson & Johnson, GlaxoSmithKline and Novartis,
the Financial Times said.
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Danone would be a natural because Bristol's recently appointed CFO sold a baby food company to the French food giant when he worked at Numico, notes Reuters' DealZone blog. Additionally, with no penetration in the U.S. baby food market, an acquisition of Enfamil would provide Danone with a distribution network to enter the market place, which is dominated by Nestle's Gerber.
Meanwhile, Nestle, which refused to comment on the rumor, might have a hard time receiving antitrust clearance. Not only does it produce Gerber baby food but it also produces Good Start baby formula, which is one of only three brands sold in the U.S. -- the other brand is Abbott Lab's Similac, which is the market leader.
As for the other food bidders -- PepsiCo, Kraft and Heinz -- baby formula is a bit out of their usual realm. PepsiCo has recently made a push into more healthful foods, so baby formula, which could be considered a nutraceutical, may fit with that strategy.
As for the pharmaceutical bidders, Novartis seems like the least likely to bite since it sold Gerber to Nestle last year. J&J, which does a big business in providing childcare products, seems like the most likely to field a serious bid.
For a history of the auction process, visit The Deal's Auction Block database. - Matthew Wurtzel
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See story about Gerber from TheDeal.com
See story about Numico from TheDeal.com
