Nestle SA has entered exclusive talks to sell its skincare business to a group led by EQT Partners for 10.2 billion Swiss francs (US$10.1 billion) in what would be one of the biggest private-equity deals this year.
The discussions with the consortium, which is co-led by the Abu Dhabi Investment Authority, are moving ahead as the world’s largest food company wraps up a hotly contested sale process for its moisturizers, acne treatments and wrinkle fillers.
The unit had revenue of SF2.8 billion last year.
Photo: Reuters
Selling dermatological brands would dismantle a business that chief executive officer Mark Schneider’s predecessor, chairman Paul Bulcke, touted as a promising new avenue when he led the company. Schneider has instead been focusing on products such as coffee, water and pet food, as Nestle works to spur sales and revamp growth.
Nestle said the deal is subject to employee consultations and is expected to close in the second half, at which time the food company would give details on what it plans to do with the proceeds.
The buyers would pay cash and the transaction would be debt-free.
The skincare unit has been a weak spot, with activist investor Dan Loeb at hedge fund Third Point saying that Nestle’s foray into the business was unrelated to its core portfolio and should be unwound.
Still, the unit attracted interest from at least a dozen potential bidders during the auction, people familiar with the matter said.
The agreed deal is the second major transaction for EQT, the Nordic region’s biggest private equity firm, this month, following the US$8 billion acquisition of fiber-network owner Zayo Group Holdings Inc with Digital Colony Partners.
The skincare unit also attracted a range of bidders, including KKR & Co, people familiar with the sale process said.
Some like Colgate-Palmolive Co and Unilever NV eyed the consumer arm, while others like PAI Partners and Baring Private Equity sought the medical treatments business known as Galderma.
A group that included Advent International, Cinven and Singapore’s GIC Pte was also interested, people familiar with the matter said previously.
The deal would be the biggest in Europe so far this year.
The cash injection could make Nestle well-placed for further acquisitions, though large ones would probably face antitrust issues given the Swiss company’s market position in food and beverages.
Nestle’s cash pile might get even larger as it expects to sell its Herta lunch-meat business by mid-year and has put medical unit Prometheus Laboratories Inc on review.
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