Fresenius, Permira table joint bid for Danone's medical nutrition unit
20 November 2014
German healthcare group Fresenius and European private equity firm Permira have tabled a joint bid for Danone SA's medical nutrition unit, The Wall Street Journal yesterday reported, citing sources close to the matter.
Last month, several media had reported that the French yoghurt company is in advanced talks to sell its medical nutrition unit for about €3-4.5 billion ($5.6 billion).
Earlier, Nestlé, US-based Hospira and Nordic investment fund EQT had held talks to buy Danone's medical nutrition. (See: Nestle, Fresenius emerge frontrunners for Danone's Medical Nutrition unit)
Fresenius's bid is the only one on the table, and Danone has set a deadline of early next week for other parties to formalise their interest, the report said.
Danone had, early this year, hired JPMorgan to find a buyer for the unit, which had sales of €1.34 billion. Danone's Medical Nutrition business has an operating profit margin of 18.16 per cent, the second-highest after its infant nutrition business.
Danone, a Fortune 500 company with 2012 revenues of over €28 billion, is one of the world's most successful health food companies and the world's largest yogurt maker. It has recently been making disinvestments in Europe and huge acquisitions in emerging markets including Russia, China and India.
Emerging markets now account for 49 per cent of the company's total sales, with North America contributing 10 per cent, and France and Russia accounting for 11 per cent each, while nearly 72 per cent of its medical nutrition sales are generated from Europe, with the rest coming from emerging markets.
Danone had acquired the nutrition unit as part of its 2007 purchase of Netherlands-based Royal Numico for €12.3 billion.
The unit 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 bestselling 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.
Fresenius is a diversified medical equipment company that provides products and services for dialysis, hospitals as well as inpatient and outpatient medical care.
It also owns Fresenius Medical Care, the world's largest dialysis company that focuses on hospital management as well as on engineering and services for medical centres and other health care facilities.
Fresenius, which has a market capitalisation of €18.2 billion, has a medical nutrition business and a deal would allow it expand its presence in the sector, but analysts say that Fresenius is likely to face anti-trust issues in the deal.
Other competitors in the $30 billion medical nutrition business are Abbott Laboratories, Mead Johnson Nutrition, Baxter International, Braun Melsungen and Hospira.