Nestle (NSRGY) has bought vegetarian food maker Sweet Earth, in a bid to expand into healthier products, as it comes under pressure from activist investor Third Point LLC.

The Swiss consumer goods conglomerate on Thursday said its U.S. subsidiary had agreed to buy the Moss Landing, Calif. plant-based foods manufacturer to give it entry into the market.

Nestle said the purchase will allow it immediate entry into the vegan and vegetarian market, which is growing by double digit and is expected to become a $5 billion market by 2020.

"Sweet Earth's portfolio spans all meal occasions, diversifying Nestle's offering beyond its existing category leadership in meals and snacks," Nestle said.

The terms of the deal were not disclosed. Nestle shares were up 0.43% to Sfr 80.90 in early afternoon trading. Shares have fallen 2.29% over the past three months.

In July, Nestle found itself the focus of Third Point LLC, led by activist investor Dan Loeb, which notched up a 1.3% stake and began agitating for change.

Nestle, Europe's most valuable public company, in response announced a Sfr20 billion ($21 billion) share buyback program last month coupled with a plan to increase leverage and prioritize acquisitions in high-growth areas as it battles slowing demand for packaged food.

Sweet Earth offers frozen meals, burritos, breakfast sandwiches and chilled plant-based burgers and proteins, which are sold in more than 10,000 stores, including Whole Foods Market (WFM) , Target Corp. (TGT - Get Report) , Kroger Co. (KR - Get Report) and Wal-Mart Stores Inc. (WMT - Get Report) .

"One of Nestle's strategic priorities is to build out our portfolio of vegetarian and flexitarian choices in line with modern health trends. With unique and nutritious food for all times of the day, Sweet Earth gives Nestle a leading position in this emerging space," Nestle USA Chairman and CEO Paul Grimwood said in a statement. He added that in the U.S. there is a consumer shift toward plant-based proteins, with as many as 50% of consumers now are seeking more plant-based foods in their diet and 40% who are open to reducing their traditional meat consumption.

Sweet Earth will continue to be led by founders Kelly and Brian Swette; the business will remain independent with support from Nestle USA's Food Division.

"Nestle's acquisition validates what forward-thinking consumers and retailers have been demanding for a while -- more wholesome and sustainable choices," Sweet Earth Kelly Swette said in a statement.

The Sweet Earth acquisition follows Nestle's recent equity stake in Freshly, a direct-to-consumer delivery service, and continues the company's evolution into new products and categories to match changing consumer preferences.

Nestle's move comes a day after activist investor Nelson Peltz released a 93-page white paper detailing his campaign for change at Procter & Gamble (PG - Get Report) , including ideas to eliminate what he called an "insular" culture as well as an effort to increase M&A activities and restructure the packaged goods company into three global business units.

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