Nestle Plans to Pay $2 Billion to Own Aimmune’s Allergy Treatment

Nestle is planning to pay $2 billion to get full ownership of peanut allergy treatment provider Aimmune Therapeutics (AIMT.O). With this deal, the Swiss company wishes to expand its quickly-growing health science business.

Insights of the Deal

Popular for its KitKat chocolate bars and Nescafe instant coffee, Nestle (NESN.S) laid down Nestle Health Science (NHS) in 2011 to rev up a new area of business between food and pharma.

Nestle said in a statement that its offer for Aimmune values the California-based biopharmaceutical firm. The company is working with the firm since 2016 and in which it already has a stake of about 25.6%, at $2.6 billion.

“Aimmune has $261 million in cash and $134 million in debt. With our prior investment of $473 million in Aimmune, we’ll be making a cash payment of just under $2 billion,” NHS head Greg Behar told Reuters in an interview.

Nestle has approximated that up to 240 million people worldwide are suffering from food allergies. With peanut allergy being the most extensive one, and with the help of Aimmune, NHS will have prevention, diagnostic, and medical treatment options available, Behar said.

“Another Milestone”

Aimmune’s Palforzia peanut allergy treatment, which recently achieved U.S. approval for children, has sales possibility of $1 billion, Behar said. The deal is projected to help in organic growth in 2021 and to cash earnings by 2022/23. The NHS business was on the right path to more than double sales by 2022, from 2 billion Swiss francs ($2.21 billion) in 2014, and was anticipated to finish 2020 at 3.3 billion francs, he added.

“Palforzia has 12 years of exclusivity, global rollout will follow and they have the technology platform for other food allergies in development,” Behar said.

Nestle, whose shares went up by 0.6% at 0739 GMT, is providing a 174% premium to Aimmune’s closing share price of $12.60 on August 28. Aimmune shares went to a record high in January when Palforzia was approved, then fell during the coronavirus crisis.

Vontobel analyst Jean-Philippe Bertschy stated that the deal was “another milestone” for NHS after it bought Atrium in 2017.

Nestle has a market capitalization of just under 317 billion Swiss francs ($350 billion), according to data by Refinitiv.