Hospira eyes Danone’s medical nutrition arm
Danone, the French consumer group, is in talks to sell its medical nutrition business to US rival Hospira in a deal that would allow the buyer move its tax base to Europe. The two companies have been in negotiations for several weeks and, according to people familiar with the situation, are discussing the terms of a potential cash and stock deal that would value the business at close to $5bn. The people cautioned that the talks were ongoing and no deal was certain, however. European consumer groups, including Nestlé and Fresenius, had been identified as prospective buyers for Danone’s medical nutrition business, which makes baby food and the Nutricia and Cow & Gate formula brands. It is unclear if either party is still interested in buying the business. Illinois-based Hospira, which had a market value of $8.64bn at Friday’s market close, could use an acquisition of the Danone business to redomicle its tax headquarters in France in a deal known as a tax inversion. To qualify for the inversion, at least 20 per of the shares in the combined company would need to be held outside the US, meaning Hospira, which has a big intravenously delivered nutrition division, would need to fund a large proportion of any bid with its own stock. The practice has come under intense scrutiny from Washington in the past month, with US President Barack Obama on Thursday labelling companies seeking to redomicle their tax bases as "corporate deserters" who were "technically renouncing their US citizenship". Danone, the world’s largest yoghurt-maker by sales, has been working on the sale of the medical nutrition business with JPMorgan, the investment bank, for some months. The company has struggled in recent years as it has faced challenges in parts of its European business and also Asia, where sales of its infant milk formula were hit by a product recall after a Danone supplier raised a false alarm about its products. The Paris-based dairy producer last week reported a 20 per cent fall in first-half operating profit as the group battled high milk prices, a strong euro and the fallout from the product recall in Asia. Analysts at Natixis said last week that the company "continues to disappoint the market. While the stock has underperformed its peers by 13 per cent over the last 12 months, the current situation has been criticised for numerous reasons: a lack of sincerity on 2014 targets, poor execution quality, high M&A risk and weak value creation for the shareholder". They added that the company must make significant cultural and managerial changes to achieve improved profitability and reduce the risk of a takeover bid by rivals including PepsiCo and Nestlé. Danone and Hospira were not immediately available for comment.
July 28 (Bloomberg) -- Danone, the French consumer products maker, is in talks with Hospira Inc. as a potential buyer for a medical nutrition unit, a person familiar with the matter said. The companies continue to negotiate a deal for the unit, said the person, who asked not to be identified because the discussions are private. Bloomberg News, citing people familiar with the situation, reported the unit was for sale in May and valued at more than 3 billion euros ($4 billion). Paris-based Danone had also talked to Vevey, Switzerland-based Nestle SA and Bad Homburg, Germany-based Fresenius SE, Bloomberg reported. Exiting the business would help Danone, the world’s largest yogurt producer, focus on its food and consumer brands. Hospira, a Lake Forest, Illinois-based maker of injectable drugs, appears to be the most likely buyer, the person said. The Hospira talks were reported yesterday by the Financial Times on its website. Daniel Rosenberg, spokesman for Hospira, didn’t respond to a call and e-mailed request for comment. Calls to Danone also weren’t immediately returned. Sales at the Danone unit, whose products include Fortimel to counter malnutrition and Neocate, a hypoallergenic product for children, rose 5.2 percent in the first quarter on a like- for-like basis to 328 million euros. Revenue at the division was about 1.3 billion euros for all of last year, representing about 6.3 percent of the group total.
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Tel Aviv Bourse Mulls Monday-Friday Trading Week, Calcalist Says 2014-07-28 05:47:35.395 GMT
By David Wainer July 28 (Bloomberg) -- TASE CEO Yossi Beinart considers move as a measure to boost exchange liquidity, Calcalist reported, without saying how it got the information. * A spokeswoman for the bourse was not immediately available to comment
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To contact the reporter on this story: David Wainer in Tel Aviv at +972-3-542-7110 or dwainer3@bloomberg.net