Nestlé Enters Exclusive Talks to Sell Skin-Health Business--Update
May 16 2019 - 03:10AM
Dow Jones News
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 brian.blackstone@wsj.com
(END) Dow Jones Newswires
May 16, 2019 02:55 ET (06:55 GMT)
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