The Swiss company Nestle, which is better known for its foods products, is on a path to aggressively expand its fast-growing health science business and as a business strategy, the company has decided to pay $2 billion to gain full ownership of peanut allergy treatment maker Aimmune Therapeutics.
Its health science subsidy called Nestle Health Science (NHS) was set up in 2011 by Nestle which is better known for its KitKat chocolate bars and Nescafe instant coffee. That allowed the company to venture into the new business area which essentially lies between food and pharma.
The offer made by nestle for the Aimmune now pushes the value of the California-based biopharmaceutical firm to $2.6 billion. Nestle already has a 25.6 per cent stake in the biopharmaceutical firm and the tow companies have been working together since 2016.
“Aimmune has $261 million in cash and $134 million in debt. With our prior investment of $473 million in Aimmune, we’ll be making a cash payment of just under $2 billion,” NHS head Greg Behar told the media in an interview.
According to the estimates of Nestle, about 240 million people suffer from food allergies all over the world with allergy from peanut being the most common of them. Behar said that the Swiss company expects that prevention, diagnostic and medical treatment options available for peanut allergy will be available with NHGS with the acquisition of Aimmune.
Behar said that a sale potential for of $1 billion can be expected for Aimmune’s Palforzia peanut allergy treatment. It was recently approved the US FDA for use in children. Nestle expects that the deal would add to organic growth in 2021 and to cash earnings by 2022/23.
He added that by 2022, Nestle expects its NHS business to more than double sales, from 2 billion Swiss francs ($2.21 billion) in 2014. The company also expect the business to close 2020 at 3.3 billion francs, he added.
″(Palforzia) has 12 years of exclusivity, global rollout will follow and they have the technology platform for other food allergies in development,” Behar said.
A premium of 174 per cent to the closing share price of Aimmune of $12.60 on August 28 is being offered by Nestle. After the approval of Palforzia, stocks of Aimmune hit a record high in January but later dropped during the coronavirus crisis.
The deal was “another milestone” for NHS after it bought Atrium in 2017, said Vontobel analyst Jean-Philippe Bertschy.
Nestle has a market capitalization of just under 317 billion Swiss francs ($350 billion), Refinitiv data showed.
(Adapted from CNBC.com)