Private equity major Platinum Equity is getting close to an agreement to buy around 50% of Nestle's European water business, the Financial Times reported on Wednesday. The deal would value the joint venture at nearly €5 billion ($5.71 billion).
According to the report, the firms hope to reach a formal agreement before Nestle releases its first-half earnings on Thursday.
Under CEO Laurent Freixe, the company has been reorganising its portfolio in an effort to increase growth and profitability by concentrating on its core brands.
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In May, Reuters revealed that Nestle had engaged Rothschild to investigate the possibility of a joint venture or sale of a portion of its European water business. Among the brands in the unit are Acqua Panna, San Pellegrino, and Perrier.
The sale process is a result of Nestle's larger strategic reorganisation to get rid of non-core assets and deal with recent supply and regulatory issues related to certain of its natural mineral water sources in France.
According to a previous report by Reuters, Nestle has been attempting to focus on about 30 of its 2,000 brands under new CEO Laurent Freixe, giving priority to trademarks like Kit-Kat chocolate wafer bars, Nescafe coffee, NAN baby formula, and Maggi noodles and seasonings.
The corporation declared last November that it was open to collaborations and agreements and that it would separate its water business into a separate worldwide unit on January 1. According to the corporation, the division has been having trouble with capacity.
The sources who spoke to Reuters earlier stated that Nestle wants to maintain a share in the water industry, which includes names like Perrier and S. Pellegrino. Early discussions about potential offers for the company had reportedly taken place earlier this year, with private equity groups like Platinum Equity, Blackstone, and One Rock Capital Partners.
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