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Water unit could be valued at 5 billion euros or more -

source

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Nestle aiming to keep a stake in the business, sources say

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Several private equity companies interested, sources say

By Amy-Jo Crowley, Andres Gonzalez and Richa Naidu

LONDON, May 8 (Reuters) - Nestle has hired

Rothschild to advise on the sale of its water division later

this year, four people familiar with the matter told Reuters, as

the Swiss food giant looks to refocus on bigger brands.

Under new CEO Laurent Freixe, Nestle has been trying to

narrow its focus to roughly 30 of its 2,000 brands, prioritising

labels including Kit-Kat chocolate wafer bars, Nescafe coffee,

NAN infant formula and Maggi noodles and seasonings.

In November, the group announced it would carve out its

water business into a standalone global unit from January 1, and

was open to partnerships and deals. The division has been

struggling with capacity issues, the company has said.

Nestle is aiming to keep a stake in the water business that

includes brands such as Perrier and S.Pellegrino, the sources

said, who spoke on condition of anonymity because the matter is

private.

The unit could be valued more than 5 billion euros ($5.6

billion), one of the people added.

Private equity firms including Platinum Equity, Blackstone

and One Rock Capital Partners have held early stage

conversations about possible offers for the business, two of the

people said. Other interested parties include PAI Partners and

CD&R, one of these people and a fourth person added.

Conversations with potential bidders are ongoing ahead of a

formal process later this year, the people said, cautioning that

no deal is guaranteed.

Spokespeople for Rothschild, Nestle, PAI, CD&R and

Blackstone declined to comment. One Rock and Platinum did not

respond to requests for comment.

Nestle's water business has attracted interest for decades,

including from private equity and strategic buyers, Sanjay

Bahadur, head of group strategy and business development, told

Reuters in an interview in November.

"The main struggle is at Perrier, the rest of the brands are

performing well," Vontobel analyst Jean-Philippe Bertschy said.

"They have had issues at several (water) sources, and there is

an ongoing battle between the French authorities and Nestle."

Nestle has previously said its mineral water products are

safe to drink but that in the interest of food safety "practices

at some of our waters production sites may not be in line with

the applicable regulatory framework".

It has said that all water production at its locations in

France is currently compliant with French regulations.

Revenue at the water division increased by 2.9% to 722

million Swiss francs ($874 million) in the first quarter of the

year, accounting for less than 4% of Nestle's total revenue,

according to its latest results.

Bottled water is a difficult category amid water scarcity

concerns and weak industry sales since the COVID-19 pandemic.

Nestle in 2021 sold its water business in North America for $4.3

billion.

($1 = 0.8862 euros)

($1 = 0.8263 Swiss francs)