Nestlé may divest Skin Health business

Nestlé may divest Skin Health business
Nestlé Skin Health has made “significant progress under its new leadership team over the past two years", says Nestlé's chief executive officer Mark Schneider

20 September 2018 - Deborah Wilkes

Nestlé is exploring strategic options for its Skin Health business, which markets a range of medical and consumer healthcare products. The Swiss company said "future growth opportunities of Nestlé Skin Health lie increasingly outside the group's strategic scope".

Commenting on the move, chairman Paul Bulcke said Nestlé was sharpening its strategic focus on the company's core food, beverage and nutritional health products. 

Nestlé stressed that its Nestlé Health Science business, which offers medical nutrition and consumer healthcare products, remained an integral part of its nutrition, health and wellness strategy.

The company said it would continue to "allocate significant resources to this growth area, which is fully in line with the group's strategic focus".

Acquired Atrium Innovations

In early 2018, Nestlé boosted Nestlé Health Science by acquiring Canadian vitamins, minerals and supplements (VMS) specialist Atrium Innovations from a group of investors led by Permira Funds for USD2.3 billion in cash. The purchase price represented around 3.3-times Atrium's 2017 sales of around USD700 million (click here to read the News story).

Nestlé expects to complete the review of Nestlé Skin Health by mid-2019.

One of Nestlé's underperforming businesses

Nestlé Skin Health is on Nestlé's list of underperforming businesses.

In 2017, the company recorded a goodwill impairment charge of CHF2.8 billion (USD2.9 billion) for Nestlé Skin Health. It said at the time that the charge reflected the “current prospects of the business” (click here to read the News story).

Announcing the strategic review, Nestlé's chief executive officer Mark Schneider said Nestlé Skin Health had made "significant progress under its new leadership team over the past two years".

"The company has developed convincing growth strategies for each of its business units and regained a competitive cost structure," commented Schneider. "Now is the right time to explore the best ownership structure for Nestlé Skin Health and to consider ways of taking it to the next level."

Nestlé Skin Health was established as a fully-owned Nestlé subsidiary in June 2014 after Nestlé acquired L’Oréal’s 50% stake in their Galderma joint venture.

The business employs more than 5,000 people across 40 countries, and reported worldwide sales of around CHF2.7 billion in 2017.

Nestlé Skin Health aims to provide “science-based solutions to meet the specific skin health needs of healthcare professionals, patients and consumers” through three business segments: Aesthetics, Consumer Care, and Prescription. Its consumer brands include Cetaphil skincare products, Daylong suncare products and Proactiv.

The Proactiv brand entered Nestlé Skin Health’s portfolio through a global acne joint venture with the US-based direct marketing company Guthy-Renker. Announcing the joint venture in March 2016, Nestlé Skin Health said it would have a majority stake.

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