Reports of New Bidder for Danone’s Medical Nutrition Business

28 Jul 2014 --- A new bidder has reportedly emerged for Danone’s medical nutrition arm, in a deal that is believed to be worth $5bn. At present talks are thought to be taking place between Danone and US pharmaceutical firm Hospira, and a potential cash and stock deal is thought to form the basis of the discussions.

The deal would be the biggest in the Hospira’s history, and would help the company move its tax base back to Europe because France has a lower rate of corporation tax. This is a practice known as ‘inversion’, which a series of US companies have followed this year. It is a practice that has been heavily criticized by President Obama, who recently described such companies as ‘corporate deserters’. 

Meanwhile, Nestlé and also German health-care group, Fresenius, are also believed to still be in the running for Danone’s medical nutrition unit, and both expressed an interest in acquiring all or part of the business earlier this year.

Danone’s medical nutrition business makes food for ill, young and elderly people. The unit saw sales growth of 7.3% for the second quarter this year, driven by a rise in demand from countries such as Brazil, Turkey, China and also the UK. French dairy group Danone entered the medical nutrition market in 2007 when it bought the Dutch baby and medical food company, Numico.

The company will most likely use the funds from the sale of this unit to help with the expansion of its faster-growing businesses, such as dairy and baby food, with acquisitions likely in key regions in Asia and Africa. Danone has been exploring a sale of this business since the start of 2014.