Nestle has confirmed plans to spin out its Buxton and Perrier water business to create a joint venture business worth around 4.9 billion euros (£4.2 billion). The Swiss maker of Kit Kat has agreed a deal with private equity firm Platinum Equity to form a new company called Peranel, in which they will each own a 50% stake.
Details of the Deal
It will include more than 30 brands, including Nestle's waters such as S.Pellegrino, Perrier, Buxton and Acqua Panna, as well as its hydration drinks and the global Nestle Pure Life brand. Nestle said the deal value “implies” cash proceeds of three billion euros (£2.6 billion) for the firm.
Trade union Unite cautioned Nestle and Platinum against an “attack on jobs” at its UK-based Buxton water business following the joint venture move. Unite general secretary Sharon Graham said: “The new owners are on notice. If there are any attempts to attack the jobs, pay and conditions of Unite members on the back of this sale in order to line the pockets of investors, we will fight back.”
Union Concerns
GMB added it would be on alert to any proposed changes to workers’ rights for Nestle's Welsh water business Princes Gate Water, which it said comes after plans announced by Nestle earlier this year to cut more than 450 jobs across the UK. Charlotte Brumpton-Childs, GMB national secretary, said: “We’ve seen all too often selling a business to private equity results in a bonfire of terms and conditions as fund managers desperately try to squeeze out every last drop of profit. That cannot be allowed to happen at Princes Gate water, or Nestle, where workers have already suffered months of fear and uncertainty.”
The new firm, Peranel, will be headquartered in Paris and led by the division’s current chief executive Muriel Lienau. Philipp Navratil, chief executive of Nestle, said: “By partnering with Platinum Equity, Peranel will be better positioned to execute its strategy with enhanced agility. Through additional focus, it will be well equipped to drive its long-term growth ambitions by strengthening this unique portfolio of international and local brands, with continued investments in innovation, premiumisation, operational excellence and sustainability.”
Financial Results
In half-year results also out on Thursday, Nestle reported organic sales growth of 3.6% for the six months to the end of June. But sales growth by volume underwhelmed investors, with shares tumbling 7%, as Nestle also cuts its profitability outlook, saying operating profit margins would be “broadly similar” in the second half after previously guiding for stronger margins.
