Nestle announced April 12 it had agreed to buy the biggest baby food maker in the U.S. for $5.5 billion in a deal that extends its global empire. Nestle said the all-cash deal to buy Gerber from the Swiss pharmaceutical group Novartis would secure it the number one position in the U.S., the world's largest baby food market, where Gerber has a 79% market share.
Gerber, based in Parsipanny, N.J., has a portfolio of around 300 food products for babies, toddlers and infants as well as a line in baby-care and life insurance.
"The acquisition of Gerber is the perfect complimentary fit," said Nestle chief executive Peter Brabeck "It not only gives Nestle the leadership position in baby food, but it also constitutes a decisive step to establish Nestle Nutrition as the undisputed global leader in the nutrition field," he added.
Brabeck predicted that the deal, which is due to be completed in the second half of 2007, would boost overall sales of its keynote nutrition division -- covering health foods, medical nutrition, infant food and performance foods -- to $10 billion.
In 2006, Gerber achieved net sales of $1.6 billion with an operating income of $307 million. Nestle estimated on April 12 that those sales could reach $1.95 billion in 2007.