Fri, Sep 14, 2018 - Page 10 News List

French billionaire eyes Chinese baby-formula market

Bloomberg

Lactalis International agreed to buy an infant-formula business from Aspen Pharmacare Holdings Ltd for 740 million euros (US$860 million) as the world’s biggest cheesemaker targets the fast-growing Chinese baby-food market.

The move will enable the company run by French billionaire Emmanuel Besnier to tap rising demand for baby food in Asia’s biggest economy following the scrapping of its one-child policy in 2016.

Furthermore, Chinese consumers have showed a preference for foreign brands in the wake of a scandal that poisoned thousands of children a decade ago.

For Aspen’s part, the sale will enable Africa’s biggest drugmaker to focus on its main pharmaceutical operations, the Durban, South Africa-based company said in a statement yesterday.

The company sells products such as hormones, anesthetics and anti-retroviral medicines in more than 150 countries and has been weighing options for the infant formula division, known within the firm as global nutritionals, for most of the year.

Aspen received more than 50 expressions of interest in the division, the company said in a full-year results presentation in Johannesburg.

Earnings per share excluding one-time items were 16.05 rand in the year through June, missing an average estimate among analysts of 17.26 rand.

“The market was expecting a bigger kicker from the sale of the milk formula business,” Nick Kunze, a money manager at Bridge Fund Managers in Johannesburg, said by telephone. “We expected anything from [U]$1 billion to [US]$1.5 billion and even [US]$2 billion, and they sold to the French and not the Chinese.”

Lactalis, based in Laval in western France, has been growing through acquisitions under Besnier, the founder’s grandson who is nicknamed “King of Cheese.”

Among notable deals, the company bought the French baby-milk business of Royal Numico NV in 2008 after that firm’s sale to Danone SA. In 2011, Lactalis acquired Italian dairy producer Parmalat SpA, and last year it purchased Stonyfield, Danone’s US organic-yogurt brand.

The company, known for its President brand of brie cheese, ran into trouble in France last year when 35 children fell ill from salmonella-contaminated baby food produced by Lactalis, with French government officials saying it did not handle the recall properly.

The company also has sparred with dairy farmers over milk prices in recent years.

Aspen’s infant formula unit contributed 3.09 billion rand (US$206 million) to revenue and 512 million rand to profit in the year through June.

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