Nestle S.a. (PC) (USOTC:NSRGY)
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6 Months : From Apr 2019 to Oct 2019
By Brian Blackstone
ZURICH -- Nestlé SA has entered exclusive negotiations with a consortium led by EQT and a wholly-owned subsidiary of the Abu Dhabi Investment Authority over the sale of its skin-health business.
The move is the latest step in a portfolio shuffle launched by Chief Executive Mark Schneider that has geared the Swiss packaged food giant's product mix toward coffee, plant-based food and vitamins.
Nestlé on Thursday said the sale would value its skin-health business, which includes face-care products Cetaphil and Proactiv, at 10.2 billion Swiss francs ($10.1 billion). The deal is expected to close in the second half of the year. Nestlé launched the review of its skin-health unit last September, and said on Thursday that it will provide an update on the use of proceeds and future capital structure at the closing of the deal.
The division generated net sales of 2.8 billion Swiss francs in 2018.
Analysts at Vontobel Research said the price tag was at the high end of its estimates. "In our model, we carried a price of 7 billion Swiss francs. However, we didn't rule out a price tag of up to 10 billion Swiss francs," they said,
Nestlé established its skin-health unit in 2014 after taking full control of Galderma, which added acne and skin-cancer treatment to its portfolio. Nestlé said at the time it wanted to take a more holistic approach to health than "mere nutrition" and bolstered the unit with several acquisitions including a $1.4 billion deal for skin-care products from Valeant Pharmaceuticals Inc. But as sales growth slowed, investors questioned how the unit fits into Nestlé's broader business.
Last year, Nestlé sold its Gerber Life Insurance unit to Western & Southern Financial Group for $1.55 billion in cash. It also sold its U.S. confectionery business -- which includes Butterfinger and Baby Ruth candy bars -- to Italian candy-maker Ferrero International SA for $2.8 billion in cash.
Meanwhile, it has beefed up its coffee business. One year ago it bought the rights to market and sell Starbucks coffee and tea products in grocery and retail stores for more than $7 billion. In 2017, Nestlé bought a majority stake in U.S. premium coffee chain Blue Bottle.
In late 2017 it bought Canadian vitamin maker Atrium Innovations Inc., for $2.3 billion.
"Nestlé is well on track in successfully reshuffling its portfolio, " the Vontobel analysts said.
--Anthony Shevlin in Barcelona contributed to this article.
Write to Brian Blackstone at email@example.com
(END) Dow Jones Newswires
May 16, 2019 02:55 ET (06:55 GMT)
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