Nestle taps Credit Suisse, Evercore for skincare review, sources say
30 OCT 2018
Nestle [VTX:NESN] has engaged Credit Suisse and Evercore to advise on a review of Nestle Skin Health, said three sources familiar with the situation.
The global business generates around USD 500m in EBITDA, said two additional sources familiar. Several sources said Nestle Skin Health could command a valuation from USD 5bn to USD 6bn and potentially up to USD 8bn.
Nestle, the Swiss food and drinks group, said in September that it was reviewing a sale or spinoff of Nestle Skin Care, which accounts for roughly 3% of Nestle’s overall revenue at CHF 2.7bn (USD 2.8bn). Approximately 40% of revenue comes from the US and Canada, and Nestle is likely to market the business as a North America company, one of the sources said.
The business operates as three units: Epiduo and Soolantra in prescription, Restylane and Azzalure in aesthetics and Cetaphil and Proactiv in consumer care. Each unit makes up roughly one-third of revenue, according to two of the sources.
Some of the sources and a sector advisor said potential suitors may only be interested in parts of the business. Large consumer product groups, for instance, may not want to buy the prescription and aesthetics units, one of the sources said. Financial sponsors would likely have to team up to make a bid for the entire business, two sources added.
One of the sources said some of the dermatology assets may be valued at 20x EBITDA, while other assets will fetch a lower valuation.
Nestle formed Nestle Skin Health in 2014 when it bought out its joint venture partner, French cosmetics group L’Oréal [OR:EN], in dermatological group Galderma for EUR 6.5bn. Credit Suisse advised Nestle on that deal.
In a spinoff, Nestle could market the business as Galderma, which remains a strong global brand name, a second sector advisor said. He pointed towards Novartis’s [NYSE:NVS] plan to spin off its eye care business Alcon as a potential comp.
Nestle uses the Galderma name for its medical skincare products, according to its website.
US activist Third Point has been pressuring Nestle to shake up its portfolio. Evercore has been advising Nestle on its response to Third Point after beating Credit Suisse for the mandate, this news service has reported.
This news service also reported on 16 October that Nestle had held a bake off to engage a financial advisor for the skincare review. No public mandate has been announced. Bloomberg News previously reported on the Credit Suisse mandate.
Nestlé and Credit Suisse declined to comment. Evercore did not respond to requests for comment.