Health and wellness solutions supplier Perrigo purchased Nestle’s Gateway infant formula manufacturing plant in Eau Claire, WI as part of a $170 million investment to strengthen and expand its formula production capabilities in the US. The firm also purchased the rights to the Good Start formula brand in the US and Canada.

The company also plans to use $60 million to expand Gateway’s capacity by 7 million lb/yr to a total of 36 million lb/yr over the next 18 months. Improvements will be made to enable Perrigo to manufacture a wider range of formulations at the site.

“Long before this year’s infant formula shortage, we had been pursuing options to increase capacity to meet growing demand for our infant formula in the US,” Murray Kessler, president and CEO of Perrigo, said in a company release. “But this year’s industry shortage galvanized our commitment to not only invest to meet the demand for our store brand and contract customers, but also to help prevent future infant formula shortages.”

A lack of capacity to service demand for Perrigo’s 17 store brand customers was a driver in the firm’s decision to invest in the Wisconsin facility. Nestle will continue to fulfil existing Women Infants and Children (WIC) contracts with product supplied from the Gateway plant.

“In making this decision, we prioritized ensuring parents and caregivers have continuity of a safe, high-quality supply of infant formula and providing a great home for our people. Perrigo was clearly the right choice,” Tarun Malkani, chief executive officer of Nestle-owned Gerber. “This sale enables Gerber to pursue new growth opportunities and focus on what we are known for in the US – our core baby food business, which includes purees, snacks, and cereals.”