French food products giant Danone has said that it is acquiring the nutrition business of the Wockhardt Group for €250 million ($355 million or Rs 1,580 crore) to enter the Indian baby nutrition and medical nutrition market. The deal includes Wockhardt’s brands like Farex and Protinex, besides its related industrial operations located in Punjab. The closing of the transaction is subject to certain terms and conditions of the agreement.
The deal comes after Wockhardt’s sale of the nutritional business to Abbott Laboratories Ltd was called off in April last year, after some lenders opposed the deal. Wockhardt has been selling its assets since 2009 as a part of its corporate debt restructuring (CDR) programme. The company also sold its 10 hospitals to Fortis Healthcare for Rs 909 crore and its animal health unit to France’s Vetoquinol in 2009.
The delay in the deal may have turned into a profitable proposition for Wockhardt as it is now getting more than two-and-half times than the earlier deal value. Abbott had agreed to buy the business for $130 million back in 2009.
The share price of Wockhardt was trading at Rs 454.8 on the BSE, down 1.04 per cent on Wednesday at 11 am.
“The strong brand awareness of Wockhardt’s Dexolac, Farex and Nusobee baby nutrition products, and their credibility among healthcare professionals will accelerate Danone’s entry into the country’s baby nutrition market. With over 25 million children born each year, India is the fastest-growing infant nutrition market in the world,” Danone said in a statement.
The deal with Wockhardt will give Danone access to a distribution network with a nationwide reach. In 2009, Danone had ended its joint venture with the Wadia group and has been looking to expand in India since then. Earlier this year, it had announced the merger of its distribution operations with those of its probiotic drinks JV with Japan’s Yakult Honsha.
Danone, which is present in more than 120 countries with around 100,000 employees, states that it is globally No. 2 in the bottled water and baby nutrition business, and Europe’s No. 1 medical nutrition firm. It had a net profit of €1.87 billion ($2.66 billion) over sales of €17 billion ($24.1 billion) in 2010, half of which came from the emerging markets.