Nestlé begins water unit sale, banks prep up to €3bn debt

Nestlé SA is forging ahead with the sale of a stake in its €5 billion ($5.8 billion) water business, which includes the well-known brands Perrier and S.Pellegrino, people familiar with the matter said.

The Swiss food company is asking suitors to submit first-round bids for the holding this month, according to the people, who asked not to be identified discussing confidential information. Nestlé is working with Rothschild & Co on the sale.

Private equity firms PAI Partners, Blackstone, KKR & Co, Bain Capital and Clayton Dubilier & Rice have shown interest in the asset, Bloomberg News reported previously.

Bankers are working on debt financing of €2 billion to €3 billion to back a potential deal, according to the people. The debt is expected to be in the form of leveraged loans, denominated in euros and dollars, they said.

The debt being prepared equates to around four to six times the water unit’s roughly €500 million in earnings before interest, taxes, depreciation and amortisation, one of the people said.

Deliberations are ongoing and no final decisions on the size or timing of the stake sale have been made, the people said. A representative for Nestlé declined to comment. A spokesperson for Rothschild didn’t immediately provide comment.

Nestlé announced plans in late 2024 to separate its water business, which has long been considered a candidate for restructuring. A revival of the process follows a leadership crisis at the company that brought the arrival of new Chief Executive Officer Philipp Navratil in September.

While bankers maintain the water unit is a great asset with premium brands, investors will take into account environmental concerns over bottled water, as well as recent scandals at Nestlé. The food company came under scrutiny in 2024 after admitting to using filtering methods illegal for natural mineral waters. It’s also battling a deepening infant formula contamination crisis.

Private equity dealmaking jumped last year in line with the broader recovery in mergers and acquisitions, with buyout firms eager to spend their vast amounts of dry powder. There is now a growing pipeline of deals as companies and private equity firms seize on the improved market sentiment, with some bankers predicting a record year for M&A.

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