Mexico's competition watchdog Cofeco has said that it has accepted a proposal by Nestlé to sell Pfizer’s baby food business in Mexico, in order to ensure that Pfizer's formula brands remain as an independent and viable competitor in the market.
Nestlé will sell the assets of Pfizer's baby food business in Mexico to an unrelated third party in order to help maintain competitive conditions in the market.
The assets that are being sold include Pfizer's formula plant, sales force, operating staff and exclusive brand licenses.
In April 2012, Nestlé had entered into an agreement to acquire Pfizer's baby food business for $11.85bn and closed the deal in December; however, Cofeco rejected the deal in November stating that it would give the Swiss firm a large share in the infant formula market, raising competition concerns.
Cofeco had determined that the acquisition of Pfizer's business would give Nestle control over 71% to 88% of baby formula market in Mexico.
As part of the agreement with Cofeco, Nestlé will license Pfizer brands to the buyer of the assets for a period of ten years.
In addition, Nestlé will not be allowed to own Pfizer brands for a period of 20 years; however, it can retain the ownership of Pfizer's Maternal products, which offer multivitamins for women, as they do not compete with any other Nestlé business.
Cofeco said that the sale will be completed soon, subject to its approval.
Nestlé beat out companies such as Groupe Danone and Mead Johnson to seal the agreement to acquire Pfizer baby food business; however, several countries placed conditions on the deal.
