Private equity firms are considering a potential buyout of Nestle’s water business, with a price tag of $5.4 billion, according to a report by Bloomberg News. The company’s water division, which includes brands such as Poland Spring, Pure Life, and Strawberry Hill, has been a key part of Nestle’s beverage portfolio.
The Swiss-based company has been reviewing the future of its water business, and a buyout could be one of the options on the table. Industry sources suggest that several private equity firms, including Blackstone Group and KKR, are considering making a bid for the business.
The water division has been a significant contributor to Nestle’s revenue, with sales of around $2 billion in 2020. The company has been looking to streamline its operations and focus on its core brands, which could lead to a sale of the water business.
A buyout would allow Nestle to reduce its debt and focus on its main beverage business, which includes brands such as Nescafe, Kit-Kat, and Maggi. The company has been under pressure to meet declining sales and postpone profitability targets, making a divestment of non-core assets a viable option.
Private equity firms are attracted to the water business due to its strong brand presence, growth potential, and pricing power. The segment has also seen strong demand in recent years, driven by consumer interest in healthier and more sustainable beverages.
However, the deal is not a guarantee, and the process is still in its early stages. The decision to sell the water business will ultimately depend on the outcome of the review and any potential bidders that come forward.
It’s worth noting that private equity firms are not the only potential buyers. Other beverage companies, such as PepsiCo or Coca-Cola, may also be interested in acquiring the water business. Ultimately, the outcome will depend on the company’s strategic priorities and the outcome of the review process.