Rumours that Nestle has been discussing the acquisition of the unit, which makes nutritional supplements - both oral and tube delivery - for use in hospitals and nursing homes, have been circulating since November.
In addition to bolstering Nestle's health and nutrition division - a major area of focus and investment - the deal comes with 2000 employees, whose expertise will boost Nestle's R&D capability.
Peter Brabeck-Letmathe, Chairman and CEO of Nestlé, said: "I am very pleased that this acquisition allows us to become a very strong player in the strategic core category of nutrition. … This is a very important step for the Nestlé Group in its strategic transformation process to a nutrition, health and wellness company as it strengthens the core of our globally managed Nestlé Nutrition business."
Nestle has said that the unit is complementary to its existing healthcare nutrition activities, both in geographical spread and products. "The combination of both offers a product portfolio covering all disease specific cases where special nutrition is needed," it said. Because of the synergies it does not expect there to be any short term material impact on the earnings.
Nestlé Nutrition is an autonomous unit within the group, and it already has a global presence in infant nutrition, health care nutrition and performance nutrition. For the first nine months of the current fiscal year the nutrition unit reported sales of CHF4.3m (€2.7m), up from CHF 3.8m (€2.4m) for the prior year period.
The transaction, which is subject to regulatory approval, is expected to complete in the second half of 2007.
In its communication about the acquisition Nestle made no mention of speculation that it is also looking to buy Novartis' Gerber baby foods division.