Danone could spend Medical Nutrition cash on baby food, dairy deals

viernes 7 de marzo de 2014 11:56 GYT

By Dominique Vidalon and Noëlle Mennella

PARIS, March 7 (Reuters) - If French food group Danone decides to sell its slowing medical nutrition business, it is most likely to invest the proceeds in its faster growth baby food and dairy businesses, targeting acquisitions in Asia and Africa.

Reuters reported last month that the world's No 1 yoghurt maker was considering selling the unit which makes tube feeding and other products, which has been under pressure from declining healthcare budgets in Europe.

While Danone has declined to comment, analysts see it spending any proceeds on bolt-on acquisitions where it is achieving higher growth, higher profits or is more dominant.

"A sale of the entire Medical Nutrition business could be a strategic decision if Danone is looking for 5-7 billion euros ($7-10 billion) financial capacity for one or several acquisitions," said Natixis analyst Pierre Tegner.

Bankers and analysts said that if Danone aimed to buy something big it would most likely be Mead Johnson Nutrition (MJN), the maker of Enfamil baby formula, or the baby food assets of Abbott in Latin America. But there was no sign of these assets being available soon.

"They would probably love to do a big acquisition but there are few targets around," said a European banking source, adding Danone had a history of reshuffling its portfolio, having sold beer, glass packaging and biscuit businesses over the years.

Analysts have long said that the whole or part of U.S. based MJN, worth $16 billion, would be a good but expensive fit for Danone, helping it grow in Asia and Latin America.

If Abbott's baby food assets in Latin America came up for sale, Danone would likely want to snap them up. The world No. 2 in baby food lost out to market leader Nestle in a battle for U.S. drugmaker Pfizer's baby food brands in 2012, which gave Nestle dominance of emerging markets.   Continuación...