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MarketScreener Homepage  >  Equities  >  Swiss Exchange  >  Nestlé S.A.    NESN   CH0038863350

NESTLÉ S.A.

(NESN)
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Nestle kicks off $5 billion sale of Pure Life, other water brands - sources

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10/15/2020 | 11:31am EDT
FILE PHOTO: A prototype of a water bottle made out of recycled plastic is pictured during a media visit for the inauguration of the Nestle Institute of Packaging Sciences in Lausanne

LONDON (Reuters) - Nestle has kicked off the sale of its North American water brands including Pure Life and Poland Spring, according to four sources familiar with the matter, as the world's largest food group continues to exit slow-growth businesses.

The brands being sold, which also include Deer Park, Ozarka, Ice Mountain, Zephyrhills and Arrowhead, could fetch around $5 billion, said one of the sources, based on core earnings of around $600 million.

Nestle boss Mark Schneider - who has bought and sold around 50 businesses since taking over in 2017 - wants to retain control of premium water brands like Perrier and San Pellegrino and sell the rest of the portfolio.

He said in June he wanted Nestle to shift its focus to better performing water brands which include Acqua Panna while the rest of the business was being put under review.

Private equity funds including Apollo, that focus on turnaround deals and cutting costs to improve profit, are expected to show interest, the sources said.

Morgan Stanley is running the sale which has also drawn interest from some industry players, one of the sources said.

Dutch bottling company Refresco, which has a large business in the United States, is among those who could explore a bid, either alone or teamed up with a financial investor, two of the sources said.

Primo Water and Niagara Bottling may also join the race for all or part of the portfolio, they said.

Nestle wants first-round bids by the end of October, according to one of the sources.

Nestle, Refresco and Morgan Stanley declined to comment while Apollo, Primo and Niagara were not immediately available.

The assets on the block generated 3.4 billion Swiss francs ($3.72 billion) in 2019 sales.

Guggenheim analysts said last year the water brands were declining at roughly 2 percent, without the impact of coronavirus, and could fetch $4.9 billion-$5.9 billion.

Yet, Jefferies estimated a price closer to 3 billion Swiss francs ($3.28 billion), adding Nestle had lost market share to private labels, while growth in the industry remains with sparkling brands like La Croix and PepsiCo's Bubly.

(Reporting by Martinne Geller and Pamela Barbaglia;Editing by Elaine Hardcastle)

By Martinne Geller and Pamela Barbaglia


Stocks mentioned in the article
ChangeLast1st jan.
AMERICAN WATER WORKS COMPANY, INC. -0.40% 153.78 Delayed Quote.25.78%
MORGAN STANLEY 2.51% 52.235 Delayed Quote.-0.33%
NESTLÉ S.A. 0.13% 107.42 Delayed Quote.2.39%
PEPSICO, INC. 0.97% 141.01 Delayed Quote.2.20%
PRIMO WATER CORPORATION -0.49% 18.28 Delayed Quote.3.61%
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Financials
Sales 2020 84 817 M 93 392 M 93 392 M
Net income 2020 11 616 M 12 790 M 12 790 M
Net Debt 2020 30 366 M 33 436 M 33 436 M
P/E ratio 2020 26,5x
Yield 2020 2,54%
Capitalization 299 B 328 B 329 B
EV / Sales 2020 3,88x
EV / Sales 2021 3,84x
Nbr of Employees 291 000
Free-Float 93,5%
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Mean consensus OUTPERFORM
Number of Analysts 28
Average target price 115,82 CHF
Last Close Price 107,28 CHF
Spread / Highest target 21,2%
Spread / Average Target 7,96%
Spread / Lowest Target -15,2%
EPS Revisions
Managers
NameTitle
Ulf Mark Schneider Chief Executive Officer & Director
Paul Bulcke Chairman
Magdi Batato Executive Vice President-Operations
François-Xavier Michel Marie Roger Chief Financial Officer & Executive Vice President
Stefan Palzer Chief Technology Officer
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