Nestle has confirmed plans to spin out its water business into a new joint venture worth approximately £4.2bn, including Pembrokeshire-based Princes Gate Water.
Deal Structure and Value
The Swiss food giant has agreed a deal with private equity firm Platinum Equity to form a new company called Peranel, in which each will hold a 50% stake. The transaction implies cash proceeds of £2.6bn for Nestle.
Peranel will be headquartered in Paris and led by the division's current chief executive, Muriel Lienau. The new company will include more than 30 brands, encompassing Nestle's waters such as S.Pellegrino, Perrier, Buxton, Acqua Panna, and Princes Gate, along with its hydration drinks and the global Nestle Pure Life brand.
CEO Statement on Strategic Move
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."
Union Concerns Over Jobs and Conditions
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."
GMB also said it would be on alert for any proposed changes to workers' rights for Nestle's Princes Gate water business, which employs around 100 people. Nestle initially acquired a majority stake in Princes Gate from the Jones family in 2018, before becoming sole owners of the Narberth-based business.
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. GMB looks forward to working constructively with the new owners to keep Princes Gate Water a profitable company where workers' current terms, benefits and conditions are protected."
Nestle Half-Year Results
In its half-year results, Nestle reported organic sales growth of 3.6% for the six months to the end of June. However, sales growth by volume underwhelmed investors, with shares tumbling 7%. Nestle also cut its profitability outlook, saying operating profit margins would be "broadly similar" in the second half after previously guiding for stronger margins.
