Swiss food group Nestlé could be set to bid for Gerber Products, the baby food maker owned by Novartis, the Wall Street Journal reported Wednesday.
Gerber Products has a 79% market share of the lucrative pre-prepared baby food market in the U.S., making it an attractive target. Nestlé could see competition for its potential bid from rival companies in the sector such as Koninklijke Numico and private equity firms.
Nestlé is already in negotiations with Novartis to buy a separate medical-nutrition business and will potentially link the two deals. Being already tied with Novartis could provide Nestlé with a competitive advantage against rivals if a bidding war ensued.
The deal would value Gerber at more than $3 billion and if the two companies were sold together they would be worth between $4 billion and $5 billion, the Journal said, citing estimates from people familiar with the matter.
The company "probably would act opportunistically" if an offer for Gerber emerged but there is no auction for Gerber under way, said Daniel Vasella, CEO of Novartis, according to the paper.