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Food companies watch out – Nestle has $28bn to spend!

Swiss-based Nestle is already the biggest specialist food company in the world and it’s likely to get a whole lot bigger soon as some time this year it completes the sale of its stake in US eyecare business Alcon to drug giant Novartis – for a chunky $28bn.

These days you wouldn’t get a food company taking a punt on eyecare but Alcon has paid off handsomely for Nestle which has already trousered $11bn of Novartis’ money.

And it’s not as though Nestle actually needs the money. It recently paid SFr12bn to shareholders in dividends and share buybacks which still left it with SFr9bn in loose change.

So it has to find something to do with the money (as well as rewarding shareholders with another bumper payout).

Nestle’s last big acquisition was Gerber baby foods in 2007 for $5.5bn so a big deal is somewhat overdue. It says it isn’t planning anything mega, instead it’s going to concentrate on smaller buys in areas of relative weakness.

One such is the Far East where it lags rivals Procter & Gamble and Unilever. Another possibility is French cosmetics giant L’Oreal where it owns 30 per cent but it’s unlikely to want to get into a fight with the family owners and the French government.

Perhaps it could buy Kraft (and the world chocolate market with it).

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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