French dairy giant Lactalis has acquired the infant formula business of Aspen Pharmacare, a South African pharmaceutical group, for €740m. As part of the deal for Aspen’s nutritional division, Lactalis will take control of manufacturing plants in Africa and Latin America, as well as stakes in joint ventures in the Asia-Pacific region.

The business includes a number of well-established infant formula brands in sub-Saharan Africa, Australia and Latin America such as Alula, Infacare and SMA. Aspen’s infant formula business generated sales of almost €180m and profits of €30m for the financial year ended June 2018. This gives the business a profit margin of almost 17%, which is indicative of the profitability of the infant formula sector.

However, this business has not come cheap for Lactalis. At a cash price of €740m, the French giant has likely paid in excess of 25 times’ earnings for Aspen’s infant formula division. In 2017, the UK-based consumer health and hygiene group Reckitt Benckiser paid $17.9bn, or more than 17 times’ earnings, to acquire US infant formula company Mead Johnson.