According to reports confirmed by Nestlé, the Chinese Ministry of Commerce (MOFCOM) approved the acquisition of Pfizer’s infant nutrition business in the last week – following in the footsteps of the Brazilian Council for Economic Defence (CADE) and the Competition Commission of India (CCI).
Through the deal, which was agreed in April 2012, Nestlé intends to combine Pfizer-owned brands such as S-26 Gold, SMA, and Promil with its existing portfolio of infant formula brands such as Nan, Gerber, Lactogen, and Nestogen.
Nestlé described the deal at the time as a “strategic move to enhance its position in global infant nutrition.”
Nestlé “pleased”
DairyReporter.com approached Nestlé following reports that the deal had been given Chinese approval. The Swiss food and beverage giant applauded the decision, but declined to discuss the acquisition any further.
“We are pleased that Nestlé’s acquisition of Pfizer Nutrition has been approved in China by the MOFCOM,” said the Nestlé statement.
“The acquisition is still subject to other closing conditions. We therefore do not make any further comment at this stage,” the company added.
Despite the MOFCOM approval, some analysts have warned that Nestlé may still be forced to carve up Pfizer Nutrition to meet competition authority demands.
Chinese market share
In April, Nestlé estimated Pfizer Nutrition’s 2012 sales at $2.4bn, of which 86% are made in emerging markets such as China.
China is one of the world’s fastest growing markets for infant formula - increasing at a rate of around 20% per year. Nestlé is the global leader in infant nutrition, but has struggled to increase its share of the Chinese market.
US-based Mead Johnson holds the largest share of the Chinese market with 16%, while French dairy giant Danone’s holds around 14%. Nestlé-owned infant formula brands currently account for around 4% of all Chinese sales.
Pfizer Nutrition infant formula products hold an 8% stake in the market. If approved further and completed, the acquisition will allow Nestlé to enhance its position in the market.