South Africa's Aspen Pharmacare has entered into an agreement to acquire Nestlé's infant nutrition businesses in Australia and South Africa for a total purchase consideration of $215m.The acquisition includes certain rights to intellectual property licences, shares and net assets in the IN businesses - Australian IN business and Southern African IN business, which are currently conducted by Pfizer.
The Australian IN business distributes a portfolio of IN products in Australia, while the Southern African IN business distributes products to territories including South Africa, Botswana, Namibia, Lesotho, Swaziland and Zambia.
The Australian and Southern African IN businesses posted revenues of AUD83m ($85.5m) and ZAR180m ($19.6m) respectively in 2012.
The IN portfolio covers all age stages - infants, toddlers and early childhood - and comprises premium, speciality and standard ranges supported by brands including S26 Gold, S26 and SMA.
Aspen has received approval from the Australian competition authorities for the acquisition of the Australian business, while the approval for acquisition of the Southern African business is pending from the South African and Namibian competition authorities.
The acquisition of the Australian business will be effective in Australia from 28 April 2013.
The deal comes after the Competition Tribunal of South Africa earlier this year approved the merger between Nestlé South Africa and Pfizer's infant nutrition business, on condition that Pfizer's infant milk formula brands in South Africa would be licensed to a third party for ten years.
Nestlé is divesting assets following its $11.9bn acquisition of Pfizer's infant nutrition business, in order to comply with antitrust regulators.
Aspen is acquiring Pfizer's product lines from Nestlé as part of its efforts to strengthen its presence in Australia, Latin America and sub-Saharan Africa.
Aspen chief executive officer Stephen Saad said the transactions support Aspen's ambitions to extend its infant nutritional business.
"We understand the potential of these products as we are familiar with the brands having marketed these in South Africa under licence in the recent past," Saad added.
Following the acquisition, Aspen will have the exclusive right of use of the Nestlé's S26 and SMA IN product trademarks for a period of ten years in Australia and Southern Africa.
It will also have the right to co-brand the licensed products over the initial ten year period and to transition these products to Aspen branded products over this period.
For a further ten year period, Nestlé will be precluded from commercialising the licensed products, effectively providing Aspen with a 20 year period to establish equivalent Aspen branded IN products.
Aspen will have a perpetual licence to the IN technology, technical know-how and formulations existing at the effective date as well as access to an agreed licensed product pipeline together with related technology developments for a period of five years from the effective date.
In addition, there will be a transfer of the ownership in the operating businesses from Nestlé to Aspen, which includes the transfer of the employees within those businesses and Aspen will be provided with transitional service arrangements by Nestlé and Pfizer, including the manufacture and supply of licensed products under a non-exclusive arrangement.
