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Published on : Jul 28, 2014

According to the Financial Times, Danone, a French dairy group is aiming at selling its business pertaining to medical nutrition to Hospira, a US group. The deal value is estimated at $ 5 billion. 

The plan is still in the pipeline as nothing with respect to the business is fully confirmed or certain. Representatives of neither business groups were willing to comment on the same. 

This business deal would bring into practice a principle highly criticized by the US President Barack Obama, known as “inversion”. This basically would enable the US buyer to shift the tax base to Europe. 

With an above average profit margin, it is quite surprising that Danone, the biggest yogurt maker of the world is aiming at selling its business.

The proceeds thus generated, will be utilized by Danone to acquire businesses in Africa and Asia in order to further boost its already booming sectors concerning dairy and baby food products. 

Last Friday, Danone had reported a very low operating profit due to downcast level of sale of dairy products in Europe and infant food in Asia. 

Analysts are now trying to focus more on the fact that Danone is a comparatively smaller business as compared to its international rivals like PepsiCo and Nestle.