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LONDON/ZURICH - Associated British Foods Plc has agreed to buy Novartis AG's food and beverage business for 272.5 million euros ($267.2 million), including the drink brands Ovomaltime and Ovaltine, Reuters reports.
The deal, which also involves the Caotina chocolate drink and Lacovo malt drink brands, is part of the Swiss group's drive to divest non-core food products and sharpen its focus on healthcare, with pharmaceuticals at its core.
ABF, known for its Silver Spoon sugar and Ryvita crispbread, will add the Novartis beverage business to its Twinings tea division.
"We are buying a business growing annual sales at four percent, which will give us critical mass in hot beverages, building on the strength of our Twinings tea," ABF Chief Executive Peter Jackson told Reuters.
The group has been looking to build critical mass in key businesses such as vegetable oils and hot beverages, and analysts said the Ovaltine deal could give it double-digit earnings growth by the second full year of ownership.
ABF will pay for the deal in cash, which stood at almost one billion pounds before it bought Unilever Plc/NV's Mazola corn oil and product business in April for $360 million.
Novartis is still in talks to sell its remaining health food and slimming products and also its sports nutrition line, which includes sports drink Isostar.
Banking sources told Reuters that Swiss food giant Nestle SA is close to reaching an agreement to buy the health food brands, which include Cereal and Gerble.