Pfizer has agreed to sell its nutrition arm Pfizer Nutrition to Nestle for $11.85bn.
The business, which sells infant nutritionals, recorded revenues of around $2.1bn in 2011, representing an increase of 15% over 2010 figures. Interest in the company was high, with Nestle having to fend off interest from Danone by increasing its offer.
Pfizer Nutrition general manager Amy Schulman said, "The transaction is a testament to the success of the Nutrition business, including its excellent reputation, talented colleagues, high-quality products and market reach."
Pfizer has been looking at spinning off some of its non-core business units in recent months in order to refocus the company after the patent expiry of its blockbuster drug Lipitor, once the world's top-selling branded pharmaceutical with sales of $12.4bn in 2008.
Pfizer chairman and CEO Ian Read said that the sale is consistent with the company's plans to maximise value-creation potential and manage capital allocation.
"We remain focused on enhancing shareholder value and, following the completion of this divestiture, we expect to allocate the after-tax proceeds to further share repurchases, or invest in other business-development opportunities, with the return on share repurchases remaining our case to beat."
The deal is subject to regulatory approval which could see Nestle forced to sell 25% of Pfizer Nutrition, and Pfizer will update its 2012 financial guidance in order to reflect the sale.
The company expects the sale to be completed by the first half of 2013.