In the light of changing needs of its customer base, the food and beverage industry leader Nestle is now moving toward changing its portfolio. The company is proposing to sell off its skin health business unit to a private equity group led by EQT Partners.  Exclusive talks for the same have been initiated by Nestle for a deal worth 10.2 bn Swiss francs ($10.1 bn).

In a statement issued on Thursday, Nestle confirmed the news adding that the company is awaiting approval from the concerned regulatory bodies, following which the deal would be closed by the second half of this year. The move comes in the wake of constant downward growth trend being witnessed by the company since the last few years, following a shift in consumer preferences from packaged foods to fresh foods.

With a change in consumer demand, the food supply giant considers portfolio change

Consequently, Nestle’s skin health unit had even been put up for sale in September 2018 by its Chief Executive Mark Schneider in a conscious move to dispose of the company’s slow and underperforming business units. After the company made a formal announcement on the sell-off deal, Nestle shares shot up 0.8%, reaching an all-time high. According to data collected by Refinitiv, the deal is expected to be the second-largest European private equity buyout, following the takeover of an Akzo Nobel unit by Carlyle in 2018.

According to a source close to Nestle, the health unit is likely to be renamed Galderma post-EQT takeover, with revenue expectations of approx. 550 mn Swiss francs (before interest, tax, depreciation, and amortization) in 2019 and roughly over 600 mn in 2020.

In response to the deal, Marcus Brennecke, partner and co-head, private equity, EQT group said, “EQT focuses on quality businesses. We have a lot of good ideas (on) how to develop Nestle Skin Health into a pearl and then make our return.”