Nestlé is in unique talks with a consortium of patrons led by US non-public fairness agency One Rock Capital to promote its North American water enterprise, which incorporates the Poland Spring and Pure Life manufacturers, for about $4bn, stated folks briefed on the matter.
The Swiss shopper items big has held talks with plenty of patrons since June, together with giant European rivals, however the US non-public fairness group, which is working with different backers, offered the best bid through the sale course of, these folks stated.
It’s unclear who One Rock is working with. One particular person briefed on the negotiations stated the US non-public fairness group was more likely to unload a few of the manufacturers instantly to different patrons.
A deal may very well be agreed inside weeks, one particular person stated, as the 2 sides have been finalising the settlement. The valuation of roughly $4bn for the division additionally contains debt. The talks have been first reported by Reuters.
Nestlé’s choice final yr to evaluation its US-based manufacturers, which additionally embrace Deer Park, Ozarka, Ice Mountain, Zephyrhills and Arrowhead, got here as gross sales of bottled water slumped through the coronavirus pandemic.
Plastic bottles have confronted an environmental backlash, whereas Nestlé’s use of groundwater in some US communities has prompted protests. Its lower-margin US manufacturers have misplaced market share within the face of powerful worth competitors.
The Vevey-based firm will proceed to personal its premium glowing water manufacturers, San Pellegrino, Perrier and Acqua Panna, together with within the US. It stated final yr that it was “totally dedicated” to increasing these.
The sale will considerably scale back Nestlé’s presence within the bottled water market. The manufacturers being bought had gross sales of about SFr3.4bn in 2019, greater than 40 per cent of Nestlé’s general SFr7.8bn of revenues from water that yr.
Nestlé declined to remark, whereas One Rock didn’t reply to requests for remark.
It could be a serious deal for New York-headquartered One Rock, which has about $3.2bn in property underneath administration throughout three funds and usually buys middle-market companies, in keeping with its web site.
The non-public fairness group was based in 2010 and appears for firms with development potential and room for operational enhancements, the positioning says. It purchased Newell Brands’ process solutions business, which makes plastic, nylons and zinc merchandise, for about $500m in 2019.