Nestlé sells US water unit to One Rock
The move reduces Nestle’s exposure to a unit that attracts criticism for polluting and using precious water reserves
Tokyo/Zurich —Nestlé agreed to sell its bottled-water business in the US and Canada to private-equity firm One Rock Capital Partners for $4.3bn, allowing the world’s largest food maker to focus on faster-growing products.
The sale to One Rock, which is partnering with Metropoulos & Co, involves brands including Poland Spring, Pure Life and Deer Park. Nestle’s international premium waters including Perrier, San Pellegrino and Acqua Panna are not part of the deal.
With the divestment of less profitable labels, CEO Mark Schneider is sharpening his focus on higher-margin operations with more growth potential. The move also reduces Nestle’s exposure to a business that attracts criticism for polluting and using precious water reserves.
The Swiss food giant has been revamping its portfolio and divesting assets since Schneider took over in 2017, as he focuses on areas such as coffee and pet food while pivoting away from snacks. Bottled water sales have struggled to recover amid a decline in restaurant dining and travel during the pandemic.
The valuation “is highly attractive for such an underperforming business”, Jean-Philippe Bertschy, an analyst at Bank Vontobel, wrote in a note. “The proceeds will be invested in higher-return businesses.”
The water sale is Schneider’s second-largest disposal, following the Sf10.2bn divestment of a skincare business. The company has been trimming its business in the US, its largest market, selling its confectionery brands there and setting up a joint venture for ice cream.
Nestle’s North American water business had sales of about Sf3.4bn ($3.8bn) in 2019, excluding the international brands.
The company has pledged to make its entire water portfolio carbon-neutral by 2025.
Billionaire investor Dean Metropoulos is known for reviving brands such as Hostess Twinkies, Pabst Blue Ribbon, Bumble Bee Tuna and Chef Boyardee. One Rock focuses on what it calls high-potential middle-market businesses, with investments via three funds, according to its website.
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