French dairy giant Danone has declined to comment on reports that it has drafted in JP Morgan to advise on potential suitors for its medical nutrition division.
Reuters, citing sources close to the alleged deal , reported earlier today that the Paris-based dairy manufacturer Danone is open to offers from industry rivals for its medical nutrition business.
Sources claim that the company has called on financial services provider JP Morgan to advise on potential buyers, adding that the division is likely to attract interest from the likes of Abbott Laboratories, Nestlé, Baxter, and Fresenius.
The business, which reported sales of €994m ($1.36bn) for the first nine months of 2013, could fetch more than €3bn ($4.1bn), the Reuters report added.
When approached, Danone refused the opportunity to confirm or deny the reports.
“We have no comment to make,” Danone spokeswoman Charlotte Pasternak told DairyReporter.com.
"Pressure on healthcare spending"
Danone’s medical nutrition division manufactures products for those weakened by illness or chronic conditions. Its product portfolio includes liquid food for hospital patients unable to eat solids, food supplements for elderly people with failing appetites, and products for allergy sufferers.
In 2012, the division reported a slowdown in growth, which Danone attributed to “deteriorating conditions on some markets in Western Europe.” Results for the first nine months of 2013 were also impacted “by overall pressure on healthcare spending.”
Divesting its medical nutrition division would allow Danone to focus on its infant nutrition and fresh dairy products division, which have suffered recently as a result of declining consumption in Europe and reputational issues in Asia.
Through the deal, which see Danone's stake in Mengniu increase from 4.4% to 9% if approved, Danone hopes "to capture the high growth potential of the chilled dairy products market in China,"