Swiss pharmaceuticals group Novartis is to sell its Ovaltine malt drink to a group of trade buyers next week in the first of a series of spinoffs worth about SF1 billion (€0.68bn), reported Canada's Financial Post this week.
The company which is Europe's third largest drugs group put a number of its nutrition brands up for sale in February in a bid to streamline its focus on healthcare and particularly pharmaceuticals.
Sources told the paper that Credit Suisse First Boston, the investment bank advising Novartis, is holding three different auctions - one for Isostar, another for the Ovaltine malt drink, and a third for the health food and slimming brands Cereal and Gerble.
The sale of Ovaltine is in its final stages, according to one source, and the vitamin-fortified malt drink is set to go to a consortium of trade buyers in a deal due to be finalised next week. Rights to the brand are to be divided by the consortium in different parts of the world.
Bankers said the brand could be worth more than SF250 million, according to the Financial Post.
Nestle, who confirmed its interest in the health brands last month is thought to be close to reaching an agreement in the near future, said the report.
A spokesman for Novartis said the sale of the brands was "on track" but declined to comment further. Novartis's health and functional food unit had sales of SF850 million (€579m) in 2001, and industry sources said the company could expect to raise about 1.2 times the value of its sales.
The sale of health and functional foods reflects an industry wide trend to "deconsolidate", but it will take time before Novartis can divest marginal businesses such as Gerber baby food and animal health, to become a pure pharma company.