Nestlé to Sell its 10% Stake in Givaudan
09 Dec 2013 --- Nestlé has launched the sale of its total shareholding in Givaudan (926,562 shares) by an institutional private placement to investors through an accelerated bookbuilding transaction. The bookbuilding is underway and the results of the placement will be announced after the process has been completed. The placement is being managed by Goldman Sachs.
Nestlé S.A. has a 10% stake in flavors and fragrances maker Givaudan S.A. valued at nearly 1.2 billion Swiss francs ($1.3 billion) as the Swiss food giant pushes ahead with a streamlining effort.
Nestlé acquired the shares when it sold the food ingredient company FIS to Givaudan for a combination of cash and stock in 2002. Nestlé has been very satisfied with its holding but believes now is the appropriate time to divest. The shares have gained 153% since the FIS sale, Reuters reported.
The sale comes as part of a new outlook the company took earlier this year when it said it would dispose of underperforming businesses to slim down its sprawling portfolio, Reuters reported.
In fact, earlier this year Nestlé sold the bulk of its Jenny Craig weight management business—in North America and Oceania—to U.S.-based private equity group North Castle Partners.
Nestlé acquired its shares in Givaudan when it sold the food ingredient company FIS to Givaudan for a combination of cash and stock in 2002;
Nestlé, which is grappling with its slowest annual growth rate since 2009, is streamlining in a bid to focus on specific areas such as infant nutrition. The company's Chief Executive Paul Bulcke told The Wall Street Journal in October that Nestlé ultimately wants to fix or sell a "sizable percentage" of its underperforming brands and businesses.
Analysts expect Nestlé to sell other assets including its PowerBar fitness bar business, as well as some smaller water brands.
Nestlé's decision to sell some units has added to speculation that the company could sell its 29.8% stake in French cosmetics company L'Oréal SA. A deal between Nestlé, which has owned a stake since 1974, and L'Oreal's founding family expires in April 2014, giving the food company more flexibility in how it can handle the investment. The agreement over the stake, valued at about EUR22 billion ($30 billion), means one party must give the other first option to buy its shares if it decides to sell its holding.
Nestlé Chairman Peter Brabeck-Letmathe, who is also vice chairman of L'Oréal, said earlier this year that "all options were on the table, including the status quo" when the deal expires.
