Nestle SA's $10 billion bid for Pfizer Inc.'s baby food business aims to strengthen the company's footprint in China. The WSJ's Jake Lee speaks to Isabella Steger about the deal

 "Pfizer Nutrition is an excellent strategic fit and this acquisition underlines our commitment to be the world's leading nutrition, health and wellness company," Nestle Chief Executive Paul Bulcke said in a statement. "Its strong brands and product portfolio, together with its geographic presence will complement our existing infant nutrition business perfectly."  China, one of the few major markets where Nestle doesn't have a leading share, is one of the fastest growing baby food markets in the world, increasing at 21% last year—more than double the global rate, according to Euromonitor International.  Nestle said it expects nearly half of further growth to come from China, but is also pinning its hopes on the region as a whole.  "China is a very important growth market, but Asia overall has similar potential," said Mr. Bulcke.  To win approval from antitrust regulators, Nestle will likely have to divest assets in certain markets where it has a dominant position, according to the people familiar with the matter. The magnitude of any such sales is unclear, and will depend on regulatory authorities in countries where it has a big market share. Mr. Bulcke said it was too early to discuss potential disposals.  " Nestle will work through the regulatory issues with the relevant authorities, but it is premature to say anything more than that," he said.  Edging out Danone came at a cost. Analysts said the deal was expensive, but worth it.  At first look it is expensive, no doubt," said Patrik Schwendimann, an analyst at Zurcher Kantonalbank.  "On the other hand, the Pfizer deal is attractive for Nestle in the long term. Its exposure to emerging markets and profitability are higher than expected," he said.  The deal is Nestle's largest since 2001 when it acquired pet food company Ralston Purina for around $10 billion.  The companies expect the deal to be completed in the first half of next year.  Nestle expects annual cost benefits of around $160 million from the deal, and costs of around $300 million spread over four years to implement them.  Mr. Bulcke said that back-office costs would be the main target for savings, although Nestle would be looking to use the combined sales forces of the two companies. The acquisition was mainly about growth, not generating synergies, he added.  Pfizer's nutrition unit is among the company's most rapidly expanding businesses, but the unit is also among Pfizer's smallest and it lies outside the drug maker's core business of selling prescription medicines. Pfizer had acquired the business as part of its 2009 takeover of U.S. healthcare company Wyeth.  "The sale of the Nutrition business to Nestle is consistent with Pfizer's intention to generate the greatest value for shareholders by maximizing the value-creation potential of our businesses and prudently managing our capital allocation," said Ian Read, Pfizer Chairman and Chief Executive Officer, in a statement. "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."  Pfizer plans to update its financial guidance to reflect the sale along with its first-quarter earnings report May 1. The company, the world's largest drug maker by sales, has been shedding businesses outside its core medicine franchise in part to boost its shares. Last August, it sold its Capsugel unit, which makes drugs in capsule form, to private-equity firm KKR & Co. for $2.4 billion. Some investors have clamored for the sale of even more units, such as its over-the-counter business that sells Advil cold-and-pain medicine and other consumer-health products.