Nestle to sell Pfizer baby food business in Mexico

Mexico's competition watchdog has said Swiss food giant Nestle will sell the infant nutrition business it acquired as part of the purchase of US-based pharmaceutical giant Pfizer's global infant nutrition unit.

The Federal Competition Commission had in November 2012 blocked Nestle's purchase of the business because it would give the Swiss company too large a share of the market for baby formula.

Nestle responded by proposing a sale of the business, including the plant where the formula is produced, to a third party within a short period of time.

The selloff could allow other baby food makers, such as Danone SA, Mead Johnson Nutrition Co and HJ Heinz Co, to enter the Mexican market, analysts say.

The buyer, who cannot have any relationship with Nestle or Pfizer, will have an exclusive license to produce the Pfizer brands. The eventual buyer must be approved by regulators "to avoid threats to free competition and market entry" in Mexico.

Mexico is the world's fourth-largest baby milk market after China, the United States and Indonesia.

Nestle bought Pfizer's global baby food business in April 2012, in a bid to harness the US company's strong presence in emerging markets, where it makes 85 per cent of its sales.

But the company has faced regulatory hurdles in getting the global deal approved at the local level. Analysts say that the Swiss conglomerate may have to sell up to 30 per cent of the Pfizer units as part of the approval process.

with inputs from agencies