Mengniu Dairy, China’s largest dairy firm, has played down reports that it is preparing a bid for the baby food business of US pharmaceuticals giant Pfizer.
The Financial Times said yesterday (23 October) that Mengniu had held talks with UBS over a possible takeover bid for the business, which Pfizer is considering selling.
In a statement to the Hong Kong stock exchange today, Mengniu distanced itself from an imminent offer but said it would monitor developments if Pfizer decides to offload the unit.
Mengniu said it had “no concrete arrangement or plan” in place but added: “The board considers that if Pfizer finally decides to dispose of its infant nutrition business, this will be an event capturing attention in the dairy industry and the group will closely monitor the development as other dairy producers would do.”
Pfizer said in July that it was considering plans to sell or spin off its infant nutrition business. The operations generate US$1.9bn in sales but Pfizer believes a sale or a spin off would enable it to focus on its pharmaceuticals arm.
The FT said a sale process could begin next month and named Danone, Nestle and Mead Johnson as potential bidders. HJ Heinz could also be interested, the FT said.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataIn a note to clients today, MF Global analyst Andy Smith agreed the four companies would be on a “shortlist of potential bidders”.
Smith questioned whether the acquisition of Pfizer’s baby food business could be “too big” for Mengniu, although he said buying a stable of “trusted” brands could help improve the Chinese firm’s image with local consumers after the 2008 tainted milk scandal.
The analyst said Pfizer’s baby food division was the fifth-largest in China, which meant Mead Johnson, which is market leader, could be precluded from buying the business on competition grounds.
Pfizer is number two in the UK’s baby food and milk formula sector behind Danone, Smith noted. He added that Nestle was “best placed” to buy the business.