SWITZERLAND – Nestle, the largest food company in the world, reportedly has its eye on expanding its empire with the acquisition of baby food maker Mead Johnson Nutrition.

For the Swiss stalwart the combination, first reported by Street Insider last week, would be beneficial, especially in China, but for Nestle’s new CEO the merger could be too soon.

In theory the tie-up between Mead Johnson and Nestle makes sense.

Nestle is the global leader in baby nutrition and Mead Johnson is No. 3.

Like the Anheuser-Busch InBev and SABMiller “Mega-Brew” merger last year, a Nestle-Mead Johnson combination would create a baby food titan.

Nestle is surely interested in Mead’s exposure to the profitable Asian market.

“We think this would be an attractive addition to Nestle’s China Infant Formula business,” Jefferies International analysts said in a note published last week.

“Mead Johnson’s focus on direct sales rather than ‘C2C’ over the past three years has put it ahead of the curve in managing channel shift.

Leveraging Mead Johnson’s distribution network would give Nestle an advantage over local and international competitors in terms of absolute points of sale and the speed at which it can track that shift.”

A combined company would hold 22% of China’s infant nutrition market.

January 23, 2017; https://www.thestreet.com/story/13961997/1/m-amp-a-hungry-nestle-looking-at-baby-food-maker-mead-johnson.html