Nestlé said it was paying 19.8 times the Pfizer unit’s estimated pretax profit for 2012. That compares with 10 to 12 times for other recent acquisitions in the food industry, according Jon Cox, an analyst at Kepler Capital Markets in Zurich.
Nestle is paying a premium according to the article, the price of becoming the largest provider and eliminating a competitor, according to the Times:
The large price paid is not entirely surprising. Fast growth is expected in this market, particularly in sales to emerging markets such as India, Pakistan and China. In our report on clinical nutrition, we detail the size of the market, what the market shares were prior to this purchase and the competitors remaining.