Nestlé, Danone outline antitrust plans for Pfizer's baby formula division

Swiss food company Nestlé and French dairy company Danone are outlining plans to overcome antitrust issues after submitting their first round bids for Pfizer's baby formula division for $10bn.

Nestlé is planning to acquire all of Pfizer's baby formula assets, and then auction some of the assets which it cannot retain due to regulatory concerns, as it would become highly dominant in few markets.

Regional companies and competitors may seek to buy the assets auctioned by Nestlé in countries, where the Swiss firm would face regulatory hurdles.

Meanwhile, Danone is considering a joint bid with Mead Johnson - a US-based manufacturer of pediatric nutrition products, and may split the division along brands or geographies, reported Bloomberg.com.

The joint bid may also make it easier for Danone to secure the financing and lower the risk of taking up a heavy debt. Both the companies may present their respective plans to Pfizer in the coming weeks.

Both the companies are expected to face antitrust issues in some markets if they acquire the unit as with this acquisition, Nestlé would hold more than 60% market share for baby formula in Australia, Mexico and other countries, while Danone would capture 80% market share in the UK, Turkey and New Zealand and more than 70% in Australia and Ireland.

Pfizer spokeswoman Joan Campion said the company has not made a decision on the infant-nutrition unit, and it is in the process of exploring options for the unit, which include a sale, spinoff or other transaction.

The company expects to announce a decision on the process in 2012 and complete any transaction from July 2012 to July 2013, Campion added.

Pfizer gained the baby food unit through its acquisition of Wyeth in 2009, and the unit posted sales of $1.9bn last year, and owns formula brands such as SMA Gold and Promil Gold.