Associated British Foods (ABF) will buy the Novartis food and beverage business, including the Ovaltine drink, known as Ovomaltine in some countries, for €272.5 million, the Swiss healthcare group said on Tuesday.
Novartis, Europe's third largest drug group, put several of its nutrition brands up for sale in February, as part of its drive to divest non-core health and functional food products and sharpen its focus on healthcare, with pharmaceuticals at its core.
The deal, which also includes the Caotina chocolate drink and Lacovo malt drink brands, dispels rumours in September that the unit was to be sold to a consortium of trade buyers. Other health brands and the sports nutrition range, which includes the energy drink Isostar, are still up for sale. Nestle is thought to be a possible bidder for Novartis' health food and slimming products Cereal and Gerble.
London-based food and ingredients group ABF, which makes Twinings tea, is already successful in the international hot beverage market as a leading speciality tea business. The company has annual sales above £4.4 billion (€7bn) and some 34,000 employees.
"We are actively pursuing acquisitions that will deliver the sort of market presence we seek,"said ABF. "Ovaltine with its strong international position and first rate management will provide an excellent growth investment for ABF,"added Peter Jackson, chief executive of the company.
The sale did not include the rights to the Ovaltine brand in the US or Puerto Rico, which are under separate licensing agreements.
The malt-based Ovaltine products, available as a powder, ready-to-drink beverage, confectionery or snack bar, provide sustained energy and nutritional benefits for mothers, young children and teenagers. For the last two years, on average, sales have grown by 4 per cent a year, with sales evenly split between Europe and the rest of the World. In addition to Ovaltine the acquisition includes a number of strong national brands including positions in coffee and hot chocolate.
Manufacturing facilities included in the acquisition are in Switzerland, Thailand, the Philippines, China and Australia.
Novartis's health and functional food unit had sales of SF850 million (€579m) in 2001.