Private equity firm Platinum Equity is reportedly nearing an agreement to acquire approximately 50% of Nestle's European water business, according to reports from the Financial Times. The potential deal would value the joint venture at nearly €5 billion ($5.71 billion). According to the report, the companies are targeting a formal agreement before Nestle releases its first-half earnings on Thursday. Nestle declined to comment on the ongoing negotiations. Earlier reports from Reuters had revealed that Nestle had engaged Rothschild to investigate the possibility of a joint venture or sale of a portion of its European water business, with the sale process representing part of the company's larger strategic reorganization.
Under CEO Philipp Navratil, Nestle has been implementing a comprehensive portfolio reorganization strategy aimed at increasing growth and profitability by focusing on core brands. As reported by the Financial Times, this divestiture represents part of the company's broader strategic initiative to optimize its business portfolio and enhance operational efficiency. The sale process is a result of Nestle's larger strategic reorganization to get rid of non-core assets and deal with recent supply and regulatory issues related to certain of its natural mineral water sources in France. According to Reuters, Nestle has been attempting to focus on about 30 of its 2,000 brands, giving priority to trademarks like Kit-Kat chocolate wafer bars, Nescafe coffee, NAN baby formula, and Maggi noodles and seasonings.
The European water business unit includes several premium brands such as Acqua Panna, San Pellegrino, and Perrier. According to Reuters, early discussions about potential offers for the company had reportedly taken place earlier this year, with private equity groups like Platinum Equity, Blackstone, and One Rock Capital Partners among the interested parties. The sources who spoke to Reuters stated that Nestle wants to maintain a share in the water industry, which includes names like Perrier and S. Pellegrino. The corporation declared last November that it was open to collaborations and agreements and that it would separate its water business into a separate worldwide unit on January 1.
The potential transaction comes as Nestle prepares to announce its first-half earnings results, with the companies reportedly targeting a formal agreement completion before this financial disclosure. According to the Financial Times report, the €5 billion valuation reflects the strategic value of Nestle's European water business operations in the current market environment. The division has been experiencing capacity challenges, as reported by Reuters, which has contributed to the strategic decision to seek external partnership or divestiture. This capacity issue has been a key factor in the company's decision to explore divestiture options for the water business unit.
