Nestlé CEO ready for ‘big deal’ after cutting L’Oreal stake

The CEO of Swiss food and drink giant Nestlé has said he will be ready for a ‘big deal’ as he reaffirms his growth strategy after cutting his stake in French cosmetics firm L’ Oreal.

Mark Schneider, CEO of the company responsible for household brands such as Nescafé and Kit Kat, told CNBC that while he’s not “forced” to make acquisitions, he’s certainly considering all options as part of his overall growth strategy.

“We would be willing to do a big deal again,” Schneider told Julianna Tatelbaum on Thursday. “Do we feel obligated to make one? No. Are we open to this? Yes.

Nestlé cut its stake in L’Oreal to 20.1% from 23.3% in December, selling 8.9 billion euros ($10 billion) of shares amid scrutiny of its influence on cosmetics brand.

A KitKat chocolate bar, manufactured by Nestlé SA, on display in London, UK, on ​​Monday July 26, 2021.

Bloomberg | Bloomberg | Getty Images

Besides potential large transactions, Schneider also said the company would consider smaller acquisitions with fewer regulatory challenges.

“It’s not that we prioritize one over the other. It’s all really driven by does it make strategic sense? Does it make cultural sense? And then we let’s take a closer look,” he said.

Schneider added that in today’s market, where assets are fully priced, smaller and medium-sized deals would likely offer better returns.

“For me, buying at the right price is the starting point for successful M&A activity,” he continued. “So it’s not a policy change, it’s just a reaffirmation that yes, we want to grow our business and that includes acquisitions, as well as internal growth.”

Nestlé released its full-year financial results on Thursday, reporting organic growth of 7.5%, beating expectations. Sales for the year rose 3.3% to 87.1 billion Swiss francs ($94.5 billion).

The company said it expects more modest growth of around 5% in 2022 amid continued cost pressures.

Nestlé shares were down 1.1% in early trading.

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