AP Features, July 27th, 2007
Nestle SA won EU approval Friday to buy Gerber Products Co., giving the world's biggest food and drink company the largest share of the global baby food market.
The $5.5 billion deal brings the beaming Gerber Baby into the same household as Nescafe, Perrier and Dreyer's, sharpening Swiss-based Nestle's recent focus on health and nutrition following its purchases of the U.S. weight control company Jenny Craig and Novartis Medical Nutrition.
The European Commission said there were overlaps between Nestle and Gerber in Poland, Cyprus, Iceland and Portugal but it did not see these as serious enough to raise antitrust concerns.
"In all the countries concerned, baby food markets are characterized by rapid growth," it said.
Nestle is the world's largest manufacturer of infant nutritional products _ largely through its leading positions in developing countries such as Brazil and China _ but had no presence in baby food in the United States.
The cherubic face of the Gerber infant dominates the U.S. baby-food market, with the company holding a 79 percent share, according to Morgan Stanley.
Buying Gerber from Novartis will help Nestle's nutrition business generate annual sales of close to $8.2 billion. The company said it expects Gerber to generate sales of around $1.95 billion this year and a 10 percent sales growth in the long run.
Nestle has coveted Gerber for more than a decade, first trying to acquire it in 1994, but losing out to Sandoz AG, which later merged with Ciba-Geigy to form Novartis. Since then, Novartis has taken steps to broaden Gerber's business beyond jarred foods.
In 2000, Gerber began selling a line of powders, oils and other toiletries for children, and in 2002 it launched microwavable meals for older toddlers. It also has a life-insurance unit.
But the baby-food business has never been a good fit for a parent company that mainly sells medications.
