Aspen Pharmacare is in talks to sell its global infant formula business, as the drug maker seeks to cash in on growing demand for baby milk. Image Supplied

JOHANNESBURG - Aspen Pharmacare is in talks to sell its global infant formula business, it said on Tuesday, as the drug maker seeks to cash in on growing demand for baby milk.

The business sells infant milk formula in the Asia-Pacific, Sub-Saharan Africa and Latin America, and has a growing presence in the Middle East and China.

“Aspen is currently engaged in discussions regarding a possible divestment of its global infant nutritionals business,” the firm said in a statement without providing more details.

The talks were first reported by Bloomberg, which identified French dairy group Lactalis as the other party to talks, and said the deal could be worth $1 billion, according to sources familiar with the matter.

Lactalis was not immediately available to comment.

The privately held group was at the center of a health crisis when a salmonella outbreak at a Lactalis milk factory last year led to dozens of babies falling ill.

Shares in Aspen, with operations in 50 countries, traded up after the announcement, rising 2.2 percent to R271.55.

“It’s going to inject some cash into the balance sheet,” said Independent Securities trader Ryan Woods.

In January, Aspen said it would review the infant milk formula business with options including a sale to a strategic partner. The unit has factories in New Zealand, South Africa and Mexico.

Infant formula is seen as an attractive business, due to rising incomes in emerging markets and population growth. It is dominated by Nestle, Danone and Reckitt Benckiser, which acquired Mead Johnson of the United States last year. 

- Reuters