• December 15, 2006

Food and beverage giant Nestle SA has agreed to buy Novartis' medical nutrition unit for $2.5 billion, the companies announced yesterday. Novartis' medical nutrition business includes Optifast dieting products, and supplement brands such as Boost and Resource nutritional supplements. The unit is expected to generate sales of $950 million in 2006.

The transaction would allow Swiss pharmaceutical giant Novartis to focus on its drug business. Baby food brand Gerber Products is also under the Novartis umbrella, but that unit is not included in the deal.

Nestle said 2,000 Novartis employees who are currently working at the medical nutrition unit in Switzerland will join the company. "This is a very important step for the Nestle Group in its strategic transformation process to a nutrition, health and wellness company as it strengthens the core of our globally managed Nestle Nutrition business," said Peter Brabeck-Letmathe, Nestle chairman and chief executive officer, in a statement.

The deal still has to be approved by regulatory authorities, but is expected to close in the second half of next year, Nestle said in a statement.