Swiss food and drink combine Nestlé has announced that it is to acquire the entire medical nutrition business of Novartis for a total amount of US$2.5bn, in a bid to reinforce its leading position in the nutrition sector.

The acquisition will make Nestlé the number two player in the fast-growing and profitable healthcare nutrition segment, where up until now the Swiss giant has only had a limited presence.

"I am very pleased that this acquisition allows us to become a very strong player in the strategic core category of nutrition," Nestlé chairman and CEO Peter Brabeck-Letmathe said. "I welcome the people from Novartis who will strengthen our capability in healthcare nutrition, including specific R&D. 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."

The deal will add around 2,000 specialised employees to the Nestlé Group, not only boosting the group's research and development capabilities, but also providing better access to medical institutions, Nestlé said.

Novartis Medical Nutrition recorded turnover of around US$950m in 2006 and is the worldwide number two player in the medical nutrition sector.

Nestlé said that Novartis' activities represented a complementary geographic fit with its own, and the combination of both would offer a product portfolio covering all disease specific cases where special nutrition is needed. As a result of the strong complementarity, Nestlé said it did not expect the acquisition to have any material impact on group earnings in the short term.