Several private equity firms are vying for a stake in Nestlé’s water business, according to the Financial Times, with CD&R, KKR, and PAI all moving into the next round of bidding.
Platinum Equity has also expressed interest in the deal, the FT noted, citing sources close to the matter.
The deal, which is said to represent a 50% stake in the business, could be worth around $5 billion; and follows the reveal that the business is looking deconsolidate Nestlé Waters & Premium Beverages.
The Nestlé portfolio
The Nestlé portfolio focuses on four businesses: Coffee, Petcare, Nutrition, and Food & Snacks. In the first three, the business has market-leading positions in what it describes as ‘truly global categories’ in its latest set of full results. These account for 70% of its sales.
For the Coffee and Petcare, the strategy is to ‘execute’ on its opportunities, while its Nutrition business will become more streamlined through the integration of its nutrition and Nestlé Health Science units.
Its Food & Snacks arm is a more regional business, comprising a mixture of leading global and local brands. According to a statement in its results, for this division it is looking to achieve disciplined portfolio management via targeted brand rationalisation.
Why is Nestlé selling a stake in its water business?
“Nestlé started a process about a year ago to find a buyer for its water businesses, having sold its North American spring water brands to One Rock Capital Partners for $4.3bn in 2021,” Julian Wild, director of Wilkin Chapman Rollits, explained.
“Nestlé has recognised that there is significant private equity money attracted by strong consumer brands and the major players such as Blackstone, Bain, CD&R, KKR and PAI are all reported as having run the rule over the business.
“Nestlé is under pressure to free up capital to invest in higher growth areas than bottled water, such as nutrition and health science. It is also wary of some of the regulatory demands and environmental concerns relating to water bottling.
“Rothschilds has been advising on the sale, and it appears that the intention has always been to sell a significant stake, perhaps driven by the value of the deal and the vendor’s desire to manage a staged exit from the sector.”
Clive Black, vice chairman of Shore Capital, added: “Bottled water is in a good spot when it comes to societal needs around clean hydration but not when it comes to the environment. Packaging taxes and the polluter pays principle are an issue whilst public availability of free water ports is a competitive headwind.
“Nestle is in a rational thinking mode and would not be diluting/disposing if it thought that the bottled water market was the future for high value earnings. That the Group is reducing exposure through a joint venture implies one of two things: it wants to keep a toe in the water, so to speak; or it cannot find a mechanism to walk away without material earnings dilution and asset impairment.”
On the sale, a spokesperson for Nestlé told Food Manufacture: “We have no comment on the stories currently circulating and nothing to add to what we said at our full year results on 19th of February: for Nestlé Waters & Premium Beverages, we began the formal engagement process with potential partners in Q1 2026 and expect the business to be deconsolidated from 2027.”
Food Manufacture has approached CD&R and Platinum Equity for a statement. KKR and PAI have both declined to comment.
