Several private equity firms are in contention for an investment in Nestlé’s water division, as reported by the Financial Times. CD&R, KKR, and PAI have advanced to the next stage of bidding for this opportunity.
Additionally, Platinum Equity has shown interest in this transaction, according to sources cited by the FT.
This potential deal, which appears to involve a 50% share in the business, could be valued at approximately $5 billion. This move comes in light of Nestlé’s plans to deconsolidate its Waters & Premium Beverages segment.
The Nestlé business spans several key sectors: Coffee, Petcare, Nutrition, and Food & Snacks. In the first three areas, the company holds leading positions in what it identifies as “truly global categories,” which collectively account for 70% of its revenue.
In Coffee and Petcare, the company aims to capitalize on existing opportunities, while its Nutrition segment will streamline operations by merging its nutrition and Nestlé Health Science divisions.
The Food & Snacks division operates on a more regional scale, featuring a combination of well-known global and local brands. As highlighted in a recent statement, this part of the business is focusing on disciplined portfolio management through specific brand rationalization strategies.
Nestlé’s motivations for divesting a portion of its water business are multifaceted. “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 at Wilkin Chapman Rollits, noted.
He further explained, “Nestlé has recognized 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.”
Additionally, “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.”
Wild continued, “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.”
In agreement, 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. Nestlé 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. 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.”
Addressing the sale, a Nestlé spokesperson 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.”
