Exclusive Talks With EQT, ADIA Started By Nestle To Sell Its Skin Health Unit

Nestle SA announced on Thursday that it is ha started a process of exclusive talks and negotiations with a consortium led by EQT Partners and Abu Dhabi’s ADIA for the possibility of the sale of its skin health business. It is estimated that any deal for the business unit would not be less than 10.2 billion Swiss francs or $10.12 billion, the company further said.

The company said that if the proposed deal with a unit of the Abu Dhabi Investment Authority and the private equity firm EQT goes through, it would be completed by the second half of 2019 if all of the regulatory clearances are received within that time.

Nestle, the biggest packaged food group of the world said in a statement that it would provide an update on the manner of making use of the money generated from the deal and the future capital structure of the company at the time of the completion of the deal.

Nestle shares were indicated 0.6% higher in pre-market activity.

The finishing touches to the deal were being worked on by EQT, claimed reports from Reuters and the Financial Times.

Since last year, the Nestle group has drawn up a strategy to divest those business units that are unprofitable and as it tries to ward off increased criticism from an activist investor who is demanding that the company be overhauled. The divestment of the skin health unit, which was put up for sale last September by the company’s Chief Executive Mark Schneider is a part of that restructuring plan.

Last financial year, the Skin Health business unit of the company generated sale revenues of 2.8 billion Swiss francs. This business unit manufactures and markets Cetaphil and Proactiv skin care products, Restylane wrinkle fillers and prescription dermatology medicines.

This specialized business unit of the company was created by Nestle in 2014 after it had purchased the stake of L’Oreal’s in their Galderma joint venture.

The former Chief Executive of the company Paul Bulcke had drawn up a strategy to venture deeper into the business of higher-growth health products in order to offset the impact of a drop in demand and sale of its traditional food products and the skin treatments business division was a part of that business strategy of the company.

This business unit however has not been able to deliver the desired results which prompted Nestle to strategize its one-off costs and restructuring.

There has been some competition for the purchase of the skin unit for EQT and ADIA. Other suitors for the business included the some rival buyout funds. Other players in the industry, included names such as a consortium of Advent and Cinven, as well as U.S. private equity firm KKR & Co Inc and European fund PAI Partners, according to reports quoting sources.

(Adapted from LiveMint.com)

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