The world's biggest food group, with brands including KitKat
chocolate bars, Gerber baby food and Nescafe coffee, signaled its
ambitions in skincare in February by taking over the Galderma
dermatology venture it had with L'Oreal <OREP.PA>.
Wednesday's move gives Nestle the North American rights to some
products taken on in that deal, boosting its control of the brands
and avoiding the situation with KitKat, to which rival Hershey <HSY.N>
owns the rights in the United States.
Citing data from GlobalData Facial Aesthetics, Vontobel analysts
said the U.S. market for Botox and other wrinkle fillers, is set to
grow from $2.5 billion in 2013 to $4.7 billion in 2018 - compound
annual growth of 13.5 percent.
"These figures speak for themselves and explain how strategic the
deal is for Nestle/Galderma," the analysts said in a research note.
"Nestle did not want to be in a similar situation as for Hershey
Nestle shares, which have performed just ahead of the FTSE Eurofirst
300 Consumer Goods Index <.FTE3X3000> this year, were up 0.2 percent
to 69.7 Swiss francs at 5:50 am ET (0950 GMT.)
European food groups, struggling with weak economies, are
increasingly moving into health and personal care markets in pursuit
of higher growth and margins. Unilever <ULVR.L>, for example, has
been selling underperforming food brands and putting more focus on
personal care products such as soap and shampoo.
Nestle said the deal with Canada's Valeant would give it the U.S.
and Canadian rights to sell the Restylane, Perlane and Emervel
cosmetic facial treatments it already manufactures, as well as
Dysport, a cosmetic treatment owned by Ipsen <IPN.PA>.
It is also acquiring from Valeant a dermal filler for cosmetic and
medical use called Sculptra.
Quebec-based Valeant, which inherited the North American rights in
its 2012 acquisition of Medicis, said the deal was not contingent on
the success of its bid for U.S. drug company Allergan Inc <AGN.N>.
The Canadian firm increased its offer for Allergan, whose biggest
product is botulinum toxin, or Botox, a few hours after announcing
the deal with Nestle.
[to top of second column]
“With this deal we have acquired key strategic assets to extend
Nestle’s activities in the field of specialized, medical skin
treatments, providing consumers with life-enhancing scientific
products,” Nestle Chairman Peter Brabeck-Letmathe said.
“This move will reinforce Galderma’s leading position in the
industry when it becomes Nestle Skin Health by allowing it to
complete its geographic footprint for its strong portfolio of brands
and leading medical solutions globally.”
Nestle also has a unit called Nestle Health Science that sells
medical nutrition products for people with specific dietary needs
related to illness or disease. It is also among the shortlist of
bidders for the medical nutrition business of Danone <DANO.PA>,
valued at about 4 billion euros ($5.5 billion), sources have told
Nestle Health Science is working as well to develop products in the
areas of gastrointestinal, metabolic and brain health.
Nestle expects to close its purchase of Galderma in July and expects
to operate the new assets through that business.
(Additional reporting by Alice Baghdjian in Zurich and Ben Hirschler
in London; Editing by Matt Driskill and Mark Potter)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.