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Summary
- Nestle SA announced it will sell its US and Canada region bottled water division to private equity companies One Rock Capital Partners and Metropoulos & Co for US $4.3 billion.
- The move follows a strategic shift towards focusing on the company’s premium international water portfolio.
- The global bottled water market is estimated to grow from US $181.7 billion in 2020 to $278 billion by 2026, according to data.
Swiss multinational company Nestle SA (SWX: NESN) announced it will sell its US and Canada region bottled water businesses for US $4.3 billion to focus on its international water brands. Private equity companies One Rock Capital Partners and Metropoulos & Co will acquire the food giant’s water brands, including Pure Life and Poland Spring among low-performing water brands.
Global water business
The move comes after the food and beverages giant announced a strategic review in June 2020 to streamline its water business. The company’s CEO Mark Schneider has progressively been divesting Nestle’s assets and overhauling its strategy by focusing on faster-growing verticals, since his appointment in 2017. The company had earlier doubled down on higher growth segments such as coffee and pet food, moving away from snacks under this strategy.
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Want to know more? Do read: Nestle SA subsidiary to Invest $550 Million For Pet Food Factory’s Expansion in Georgia
The company's North American bottled water sales stood at CHF 3.4 billion (US $3.8 billion) in 2019, not including the international brands. Water sales have faced recovery challenges due to a fall in customers eating out during the pandemic. Notably, premium brands such as Perrier, S.Pellegrino and Acqua Panna aided in the growth recovery of its North American water sales in the third quarter of 2020. The brands mentioned above were not part of the acquisition.
The company stated this deal would allow them to focus on its global premium brands, local natural mineral waters, and related hydration products. According to research firm Mordor Intelligence, the global bottled water market is estimated to grow from US $181.7 billion in 2020 to $278 billion by 2026.
Acquisition terms
Dean Metropoulos, founder, Metropoulos & Co's will become Nestle Waters North America's chairman and interim CEO after closure of the deal, One Rock Capital said. The transition will take place once the transaction is expected to be complete by spring this year. The food company's North American water arm employs 7,000 people in the US and 230 in Canada.
Rising pressure
The company has also been facing increasing pressure from environmental groups and activist investors, prompting it to invest in climate-friendly businesses such as developing the first vegan version of its leading chocolate brand KitKat.
Want to know more? Do read: Nestle to invest $3.58-bn for tackling climate change
Stock performance
Nestle’s (SWX: NESN) stock price closed at CHF 100.30, down by 0.56 per cent as of 16 February.
