Nestle SA (NESN) is working with Rothschild to sell Latin American assets valued at more than $1 billion to win regulatory approval for its purchase of Pfizer Inc. (PFE)’s nutrition unit, three people with knowledge of the matter said.
The company, based in Vevey, Switzerland, is in the early stages of a process to sell the Latin American assets, said one of the people, who asked not to be named because the plans are private. The assets may draw interest from H.J. Heinz Co. (HNZ), Danone (BN) SA, Abbott Laboratories (ABT), Mead Johnson Nutrition Co. (MJN) and Grupo Lala SA, two people said.
The divestment of the Latin American divisions paves the way for the nearly $12 billion purchase of the Pfizer unit by Nestle, one of its biggest acquisitions. With the deal, the world’s largest food company bought a business with almost 85 percent of sales in emerging markets.
“There will be plenty of interest, especially for Mexico,” said Marco Gulpers, an analyst at ING in Amsterdam. “That’s most likely to be the part that they need to divest the most and it would be a nice block to have.”
Nestle shares were little changed at 60.30 Swiss francs as of 10:21 a.m. in Zurich. Assets in Latin America that are divested may account for about $300 million of the acquired unit’s sales, according to Jon Cox, head of Swiss research at Kepler Capital Markets in Zurich.
Representatives at Nestle, Rothschild, Abbott, Danone, Mead Johnson and Heinz declined to comment on the process. Officials at Grupo Lala didn’t immediately return calls seeking comment.
Nestle added about 4,500 employees with the completion of the purchase of Pfizer nutrition, a deal in which the Swiss company was advised by Rothschild and Deutsche Bank AG. The company in December said it is awaiting regulatory approval in five Latin American nations as well as Kenya and South Africa.
The Latin American countries represent the most significant portion of divestments required, according to one person familiar with the process. Mexico, Venezuela and Colombia are probably among the countries targeted for divestments, the person said. Last year, Mexico’s antitrust agency rejected Nestle’s acquisition of Pfizer’s infant nutrition unit, saying the deal would hurt consumers.
Chinese authorities cleared Nestle’s purchase of the nutrition business late last year, helping the company gain traction in a market it already dominates for infant-nutrition products.
The Pfizer purchase follows Nestle’s acquisition in 2011 of a 60 percent stake in Hsu Fu Chi International, a Chinese snack and candy maker, and China’s Yinlu Foods Group, a foodmaker.
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