Nestlé sells half of its drinking water business to Platinum Equity for US$3.4 billion
The new entity, Peranel, has an overall valuation of approximately US$5.6 billion including cash and debt. Nestlé has finalized a deal to sell half of its drinking water business, which owns Perrier and San Pellegrino, to private equity firm Platinum Equity. Agreed to sell a 50% stake in its drinking water and beverage business to Platinum Equity for US$3.42 billion in cash. Nestlé (stock code NESN, down 7.07%) promoted restructuring and faced high pressure costs, and finally finalized a deal worth US$3.4 billion to sell half of its stake in the drinking water business to private equity firm Platinum Equity, which includes two well-known brands, Perrier and San Pellegrino. The Swiss consumer products giant announced that it will set up a joint venture with Platinum Equity, run by tycoon Tom Gores, to transfer a 50% stake in its drinking water and beverage business for 3 billion euros (equivalent to $3.42 billion) in cash. The new joint venture, named Peranel, has an overall valuation of 4.9 billion euros in cash and debt, and the transaction is expected to be completed in the first half of next year. The transaction is the latest step in Nestlé’s wider restructuring plan. The restructuring pushed up the company's expenses in the first half of the year, dragging down profits. The maker of Kit Kat chocolates and Nescafé coffee reported earnings on Thursday: net profit for the period was 3.47 billion Swiss francs ($4.26 billion), missing analysts' consensus estimates compiled by the company. The market had expected net profit to be basically flat year-on-year, reaching 5.07 billion Swiss francs. Affected by the results, Nestle's shares fell 6.3% in early trading. Nestle has previously stated that it plans to divest some brands. In February this year, Nestlé merged the remaining ice cream business into the joint venture Froneri, while still retaining a 50% stake in the joint venture. Nestlé has also been looking for takeovers for vitamin sector brands such as Nature's Bounty to drive revenue growth; its business focus has shifted to high-end nutrition brands such as Solga and Life Garden. Nestle revealed on Thursday that it plans to complete the sale of affordable brands in the vitamin sector in the first half of next year. It is expected that this asset disposal will generate a loss of about 1.3 billion Swiss francs. Nestle confirms it will sell half of its stake in its drinking water beverage business for US$3.42 billion. In recent years, Nestlé has suffered successive business setbacks, weak performance, and management turmoil. CEO Philippe Navratil launched a comprehensive reform after taking office in an effort to stabilize the company's operating situation. Since taking charge of Nestlé in September last year, he has followed the example of competing products in the industry and focused on streamlining the huge brand asset matrix. Nestle plans to lay off about 16,000 people, sell non-core brands in batches, and reorganize the company's business into four main lines: coffee, pet care, nutrition and health, and general food. Many consumer goods companies have simultaneously launched lightweight reforms. Dove soap parent company Last year, it split its ice cream business and independently established Maglon Ice Cream Company; it also reached a cooperation with condiment manufacturer McCormick to integrate the food sector businesses of both parties. Coincidentally, the British United Food Group, whose business spans sugar and clothing, plans to separate the affordable clothing brand Primark and the food business. Nestlé simultaneously disclosed on Thursday that organic sales in the second quarter rose 3.7% year-on-year. Performance growth was mainly driven by price adjustments, with price contribution increasing by 1.9%; sales growth (the industry calls actual endogenous growth) was 1.8%. Total sales in the second quarter were 21.79 billion Swiss francs, compared with 21.63 billion Swiss francs in the same period last year; analysts' consensus forecast was 21.71 billion Swiss francs, and actual revenue slightly exceeded expectations.