Nestle SA is in exclusive talks to a group led by EQT Partners and Abu Dhabi Investment Authority to sell its skincare business for an amount of $10.1 billion. Once followed through, it would become one of the biggest private-equity deals this year. This is also Nestle's biggest divestment in more than a decade. CEO Mark Schneider is dismantling the business that the CEO before him, Paul Bulcke, called a promising new avenue just a couple of years ago. Schneider has instead been focusing on products such as coffee, water and pet food.
According to a report in Bloomberg, the skincare unit that has products like Cetaphil and Proactiv proved to be a weak spot for the company. Activist investor Dan Loeb believes that the skincare unit was unrelated to its core portfolio. The skincare arm also witnessed an efficiency drive, which led to the shedding of a fifth of its employees. While the sales for the products have seen an uptick, it has proven not to be part of Schneider's strategy.
The deal will be the biggest in Europe so far in 2019, boosting Nestle's position for further acquisitions. The company is also planning to sell its Herta lunch-meat business by mid-year and has put medical unit Prometheus Laboratories Inc on review.
The skincare unit of Nestle attracted a range of bidders including KKR & Co., as mentioned in Bloomberg. Colgate-Palmolive Co and Unilever NV also eyed the consumer arm. The skincare business was built in 1981 as a joint venture between Nestle and L'Oreal SA. Nestle eventually paid more than $3 billion to L'Oreal to buy the business out in 2014.