Snow Brand Milk Products Co. announced Wednesday it has abandoned talks with Nestle Japan Holding Ltd. over a baby-care products alliance and has instead reached an agreement with Otsuka Pharmaceutical Co.
The scandal-hit dairy firm will aim to recover public confidence through the tieup, while Otsuka Pharmaceutical will look to increase its sales of baby-care goods, including feeding bottles, baby food and baby skin-care products.
The alliance will center on Bean Stalk Snow Co., a wholly owned subsidiary launched Wednesday by Snow Brand Milk.
On Oct. 1, Snow Brand Milk will spin off its baby-care products division to Bean Stalk Snow and sell 20 percent of the subsidiary's stock to Otsuka Pharmaceutical.
Otsuka Pharmaceutical will then sell its baby-care products under the Bean Stalk brand whose name derives from the fairy tale "Jack and the Beanstalk."
The unit is currently capitalized at 10 million yen and is based in Sapporo. Its marketing operations will be based in Tokyo according to company officials.
Tadaaki Konose, president of Snow Brand Milk, will assume the presidency of the new firm.
Snow Brand Milk has seen its business suffer in the wake of the collapse of its subsidiary, Snow Brand Foods Co., which was involved in a series of scandals, including a meat-mislabeling scam.
The Otsuka Pharmaceutical deal nearly marks the end of Snow Brand Milk's efforts to reconstruct itself by forging tieups with other companies.
Snow Brand has agreed with confectioner Lotte Co. to tie up in the ice cream business and has spun off its milk business, which is now integrated with two major agricultural cooperatives.
Snow Brand Milk and Otsuka Pharmaceutical have already forged an alliance in the clinical nutrition business.