Danone eyes sale of medical nutrition business worth €3 bn

Danone is planning to sell its Medical Nutrition business which could fetch the French diary major over €3 billion ($4.08 billion), Reuters yesterday reported, citing three people familiar with the deal.

The move comes three years after the Paris-based company acquired the nutrition business of Indian pharmaceutical major Wockhardt, for Rs1,576 crore (€250 million) – a move designed to enter the Indian baby and medical nutrition market. (See: Danone to buy Wockhardt's nutrition business for Rs1,576 crore)

Danone has hired JPMorgan to find a buyer for its medical nutrition business, which had sales of €1.3 billion and earnings before interest and taxes of €231 million in 2012, the report said.

The medical nutrition business could attract interest from peers such as Abbott, Nestle, Baxter or Fresenius, the report added.

Danone operates in two fields of medical nutrition – fortified products to counter malnutrition, eating difficulties and deficiencies, and targeted medical nutrition for people suffering from allergies or undergoing medical treatment.

Its best selling products are Fortimel – a paediatric nutrition product administered orally or through a feeding tube; Infatrini – a range of concentrated nutritional supplements, and; Neocate – a hypo-allergenic product for children.

Nearly 72 per cent of its sales are generated from Europe, while the rest comes from emerging markets.

Danone, a Fortune 500 company with 2012 revenues of over €28 billion, is one of the world's most successful health food companies. The world's largest yogurt maker has recently been making disinvestments in Europe and huge acquisitions in emerging markets like Russia, China and India.

Emerging markets now account for 49 per cent of the company's sales, while North America contributes 10 per cent, France and Russia account for 11 per cent each.

With 160 plants and around 100,995 employees, Danone has a presence in all five continents and over 120 countries. It is No 1 in fresh dairy products, No 2 in packaged water and baby nutrition and European number 1 in medical nutrition.