Aspen acquires Nestlé SA infant nutrition division for $215m

18th April 2013

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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Aspen Group has acquired Nestlé South Africa’s infant nutrition businesses, which distribute a portfolio of infant nutrition products in Australia and certain Southern African territories, for $215-million.

This came shortly after the Competition Tribunal earlier this year approved, with conditions, the merger between Nestlé South Africa and Pfizer’s infant nutrition business, Pfizer Nutrition, which saw Nestlé South Africa acquiring Pfizer Nutrition for $11.85-billion.

The South African Competition Commission at the time, expressed concern that, should the merger proceed without conditions, the merged company could increase the price of infant milk formula, having secured a considerable market share.

But the merger was approved by the tribunal on condition that a detailed transitional rebranding remedy would provide for the licensing of the use of all infant milk formula brands of Pfizer in South Africa to a third party for a period of ten years.

While the Australian competition authorities had approved Aspen’s acquisition of the Australian business, the South African and Namibian competition authorities’ approval of the acquisition of the Southern African business was still pending.

The $215m deal would award Aspen the exclusive right of use of certain Nestlé product trademarks in Australia and Southern Africa for a period of ten years, while allowing the group to retain the right to co-brand the licensed products over this period and transition these products to the Aspen brand.

In addition, for a further ten-year period, Nestlé would be precluded from commercialising the licensed products, effectively providing Aspen with a 20-year period to establish equivalent Aspen-branded infant nutrition products.  

Aspen would also have a perpetual licence to product technology, technical know-how, and formulations existing at the effective date, as well as access to an agreed licensed product pipeline and technology developments for a period of five years.

The transfer of ownership of the operating businesses from Nestlé to Aspen would include the transfer of the employees within those businesses.  

“Aspen will also be provided with transitional service arrangements by Nestlé and Pfizer, which includes the manufacture and supply of licensed products under a       nonexclusive arrangement,” the company said in a statement on Thursday.  

These arrangements would provide Aspen with the flexibility to transition the       manufacture of infant nutrition products to its own sources of supply, including to its own manufacturing facilities within a three-year period. 

“The transaction presents a good commercial and strategic fit for Aspen, given its heritage with these brands and its strength in the infant nutrition market in South Africa, coupled with its local manufacturing capabilities.

“In Australia, the transaction will synergistically augment Aspen’s strong presence in the grocery and over-the-counter market segments and will provide the company with an enhanced platform from which to extend the global footprint of its business in the medium term,” the company stated.

Revenue for the Australian and Southern African infant nutrition businesses in 2012 amounted to A$83-million and R180-million respectively.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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