Nestle to examine strategic options for skin health unit

(Adds detail, background)

By John Revill

ZURICH, Sept 20 (Reuters) - Nestle said on Thursday it was exploring strategic options for its skin health business, saying it believes the unit - once seen as a rising star - might be better off outside of the Swiss food maker.

Following a strategic review earlier this year, Nestle's board decided to increase the company's focus on food, drinks and nutritional health products.

The move comes as the KitKat chocolate bar maker has come under pressure from New York-based hedge fund Third Point, run by investor Daniel Loeb, who has demanded a bolder and faster overhaul at the world's biggest food group

"The board has come to the conclusion that the future growth opportunities of Nestle Skin Health lie increasingly outside the group's strategic scope," Nestle said. "The board has therefore decided to explore strategic options for Nestle Skin Health."

Nestle's skin health business sells dozens of different products via prescription, over the counter and as corrective and aesthetic products which are used by doctors.

"Sharpening our strategic focus on Nestle's core food, beverage and nutritional health products offers the best opportunity for long-term profitable growth and is fully in line with the pursuit of our company's purpose," said Paul Bulcke, chairman, Nestle.

The business, which Nestle created in 2014 when it acquired L'Oreal's stake in Galderma, employs 5,000 people and posted sales of 2.7 billion Swiss francs ($2.79 billion) in 2017.

The division has struggled in recent years, with Nestle cutting 450 jobs at one of their research and development centre in southern France last year.

Lean sales led the company to also shut a factory in Switzerland in August last year.

Skin treatments had been a major part of a push by Nestle into higher growth and more profitable health products to counter a slowdown in its traditional food businesses, which range from Purina pet food to Perrier water.

However, the move turned sour, prompting Nestle to launch the review, which is due to be completed by mid-2019.

"As a consequence, our board is convinced that exploring strategic options for Nestle Skin Health is in the best long-term interest of this business and Nestle shareholders," Bulcke added.

($1 = 0.9673 Swiss francs) (Reporting by John Revill; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)

2018-09-20 08:01:11

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