Nestl SA, the world's biggest food and drink company, said Thursday it will buy Gerber Products Company from pharmaceutical maker Novartis SA for US$5.5 billion, giving it the largest share of the global baby food market.

The acquisition helps further Nestl's recent focus on health and nutrition, following its purchases of the U.S. weight control company Jenny Craig and Novartis Medical Nutrition.

Nestl, which owns brands such as Nescafe, Perrier and Dreyer's, is also the world's largest manufacturer of infant nutritional products - largely through its leading positions in developing countries such as Brazil and China - but had no presence in baby food in the United States.

Gerber, which Nestl has coveted for more than a decade, dominates the U.S. baby-food market, with a 79 per cent share, according to Morgan Stanley.

"The acquisition of Gerber is the perfect complementary fit," said Nestl chairman and CEO Peter Brabeck-Letmathe. "It not only gives Nestl the leadership position in baby food, but it also constitutes a decisive step to establish Nestl Nutrition as the undisputed global leader in the nutrition field."

Adding Gerber will help the company's nutrition business generate annual sales of close to US$8.2 billion. The company said it expects Gerber to generate sales of around US$1.95 billion this year.

Nestl shares fell 0.7 per cent to 406.05 Swiss francs in Zurich, where Novartis shares were up at 67.35 francs (US$55.27).

Nestl first tried to acquire Gerber in 1994, but lost to Sandoz AG, which later merged with Ciba-Geigy to form Novartis.

The purchase is expected to be completed during the second half of this year, subject to approval by regulatory authorities, Nestl said.

- AP