Nestle kicks off $5 bln sale of Pure Life, other water brands - sources

Primo Water

15/10/2020 16:14

* Buyout funds including Apollo expected to bid - sources
    * Dutch firm Refresco among likely industry bidders -
sources
    * Morgan Stanley running auction process - source
    * First-round bids due end of October - source
    * Assets on the block had $3.7 bln in 2019 sales

    By Martinne Geller and Pamela Barbaglia
    LONDON, Oct 15 (Reuters) - Nestle  NESN.S  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.
 urn:newsml:reuters.com:*:nL8N2DO5D7
    Private equity funds including Apollo  APO.N , that focus on
turnaround deals and cutting costs to improve profit, are
expected to show interest, the sources said.
    Morgan Stanley  MS.N  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  PRMW.TO  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  PEP.O  Bubly. 

 (Reporting by Martinne Geller and Pamela Barbaglia;Editing by
Elaine Hardcastle)
 ((martinne.geller@thomsonreuters.com; +44 (0) 2075420797;
Reuters Messaging: martinne.geller.reuters.com@reuters.net))