Nestle SA's sale of a 25% stake in eye-care company Alcon Inc. for $11 billion could give the acquisitive Swiss consumer products giant ammunition for more deals. With some notable consumer product businesses on the auction block, Nestle would have some high-profile brands to buy.
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A brand often cited as a potential Nestle target is Bristol-Myers Squibb Co.'s Mead Johnson unit, which is best known for the Enfamil baby formula brand. Bristol began a strategic review of the unit late last year. Some of the bidders included Nestle, Novartis AG and others, as noted by our own Corporate Dealmaker. However, with Novartis spending $11 billion on Alcon, it may be shy of jumping into the Mead Johnson auction, which is likely to fetch between $7 billion and $9 billion. The Alcon deal, though, gives Nestle enough to outbid any rival should it want to add Enfamil to its portfolio of baby brands, which already includes Good Start baby formula and Gerber foods. Of course, as Dealscape already pointed out, the Good Start brands may elicit a tough antitrust review for Nestle should it try to swallow Enfamil.
Another target that is on the block is Unilever NV's laundry brands, which include the All Laundry detergents. Unilever put the brands on the block last summer, and there has been no update on the progress. A bid for the detergent brands would diversify Nestle's holdings and help it better compete with U.S. rival Procter & Gamble Co.
If European financial markets are any indication of where Nestle will deploy that $11 billion, then L'Oreal SA is a likely target -- even if it isn't on the auction block. Nestle already owns a 28% stake in L'Oreal, the world's largest cosmetics maker. Consequently, the Alcon news sent L'Oreal shares up in Paris trading, notes Bloomberg. A bid for L'Oreal, like a bid for Unilever's All detergents, would diversify Nestle's brand holdings, unlike a purchase of Mead Johnson. - Matthew Wurtzel
See Alcon story from TheDeal.com
See related story from Corporate Dealmaker
See L'Oreal story from Bloomberg
See story about Bristol Myers from TheDeal.com
See story about Gerber from TheDeal.com
See Mead Johnson auction profile from Auction Block (subscription required)
See Unilever auction profile from Auction Block (subscription required)
