Nestlé opens doors to L’Oreal stake sale

Nestlé SA chief executive officer (CEO) Mark Schneider needs to keep filling his shopping cart.

The Swiss owner of Nespresso coffee and Perrier water said it plans “active portfolio management” after its weakest sales growth in more than 20 years. Schneider said he sees the most potential in small and mediumsized deals, even as the company opened the door to a bigger one — a possible sale of its 23 per cent stake in L’Oreal SA.

Since taking over about a year ago, the new CEO has fired up Nestlé’s mergers-and-acquisitions machine, snapping up Canadian dietary supplements maker Atrium Innovations for $2.3 billion and Blue Bottle Coffee while jettisoning the company’s ailing US confectionery business. Turnaround efforts haven’t been enough to offset erosion of mass-market food brands, as Nestle’s 2017 sales growth fell short of

analyst expectations.

Nestlé dropped as much as 2.8 percent in Zurich. “Some of these things have a time lag to kick in,” Schneider said at a press conference. The Blue under pressure to boost returns after activist investor Dan Loeb took a $3.5 billion position in the company. The hedge-fund manager wants Nestle to consider selling its stake in L’Oreal, an investment that dates back to 1974. Such a move could prompt a broader realignment of shareholdings in some of Europe’s biggest companies, including French drugmaker Sanofi, in which L’Oreal holds a stake.

A sale would deprive Nestlé of the French cosmetics company’s faster growth while giving it more ammunition for bigger acquisitions. Nestlé said it won’t increase its stake in L’Oreal and won’t renew a shareholder pact with the Bettencourts, family of the company’s founder. Schneider said those are the only decisions the Swiss firm has made so far regarding the holding.