- Nestlé said it is buying Aimmune Therapeutics, a biopharmaceutical company that makes a therapy designed to help children reduce their allergic reactions to peanuts by exposing them to small but increasing amounts of the legume. The deal values the company at about $2.6 billion.
- The acquisition would boost the Swiss company's large health-science business that is predominantly focused on dietary management. The division is involved in areas such as pediatric health, allergy, acute care, oncology, healthy aging and gastrointestinal health.
- Nestlé purchased its first stake in Aimmune in 2016 before making additional investments that boosted its ownership in the biotech company to nearly 26%.
While Nestlé is best known for its presence in water, frozen foods and coffee, among other areas, the world's largest food manufacturer has quietly built a thriving health-science business in recent years.
In June, Nestlé said it would purchase a majority stake in Vital Proteins, a maker of collagen bars, beverages, capsules and powders. Last year, it purchased personalized vitamin company Persona, and in 2017 it spent $2.3 billion for privately held Atrium Innovations, a maker of nutritional health products.
The acquisition of Aimmune is its biggest push yet into the space, giving the company ownership of the peanut-allergy treatment approved in February. Some analysts have estimated the treatment could generate revenue of more than $1 billion by 2025. The Peanut Institute, citing data from National Institute of Allergy and Infectious Diseases, said up to 1% of Americans have peanut allergies, and studies show a fifth of people can outgrow them.
Nestlé has aggressively overhauled its portfolio in recent years in an effort to generate more growth with CEO Mark Schneider, a former healthcare executive, who took over the top post in 2017.
In food, Nestlé sold its U.S. chocolate business in 2018 to Ferrero for $2.8 billion, and then announced late last year it would sell its U.S. ice cream business valued at $4 billion to Froneri. Nestlé recently said it is considering the sale of the majority of its struggling North American Nestlé Waters business unit that includes brands such as Poland Spring and Deer Park. Its also bulked up its offerings in coffee through the acquisition of Chameleon Cold-Brew and a $7.15 billion deal with Starbucks.
As the purchases and divestitures in food and beverage show, Nestlé is not beholden to keeping anything in its portfolio not generating a high-level of growth even if these are offerings it has been associated with for decades. The acquisition of Aimmune is expected to be accretive to Nestlé's organic growth in 2021, the company said.
The deal is a "significant milestone in Nestlé Health Science," Jean-Philippe Bertschy, an analyst at Bank Vontobel in Zurich, told Bloomberg. "Nestlé has been very vocal lately in its intention to strengthen its position with acquisitions."
Nestlé also is not afraid to move beyond its core expertise in food to diversify its reach through a major acquisition. The move into peanut-allergy treatments, while having a tie in with food, mirrors similar deals in health science that have centered on making a person feel better or receive the nutrition they need. Increasingly, people are turning to food for more sustenance. According to a Kerry study published in 2019, 65% of consumers seek functional benefits from their food and drink.
As the world's largest food company, Nestlé is acutely aware of the importance of food for consumers and what they are looking to receive when consuming it. It's a big reason why Nestlé boosted its offerings in plant-based foods through its Sweet Earth purchase about three years ago, along with other innovations in the segment across its global portfolio.
In this case, if more people don't have to worry about consuming a small amount of peanuts by accident, that could put their overall state of mind at ease and make their time consuming food more enjoyable. As Nestlé continues to change its portfolio, further deals could be coming, especially in its heath-science division. If Aimmune can generate more than $1 billion in sales annually in a few years as some predict, then Nestlé's efforts to increase growth will have a taken a major step forward in large part because of this forward-thinking deal.