Nestlé sold its skin health unit to a consortium of investors led by EQT and a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) for CHF 10.2 billion ($10.1 billion). Rebranded as Galderma, it will be the world’s largest independent global dermatology company.

WHO: Nestlé established Nestlé Skin Health in 2014 after taking full control of Galderma, which added acne and skin cancer treatments to its portfolio. Nestlé Skin Health provides science-based solutions to meet the specific skin health needs of healthcare professionals, patients, and consumers. It offers a range of leading medical and consumer brands through three complementary business units in prescription, aesthetics, and consumer care. Headquartered in Lausanne, Switzerland, Nestlé Skin Health employs more than 5,000 people across 40 countries.

Galderma was founded in 1981 and has operated as a wholly owned subsidiary of Nestlé since 2014. The business offers a range of medical and consumer skin health solutions through three business units: Aesthetics, Prescription, and Consumer Care, with combined revenues of CHF 2.8 billion and approximately 5,000 employees worldwide.

Founded in 1994 with the backing of Sweden’s prominent Wallenberg family, EQT has grown into one of Europe’s largest buyout firms with about €40 billion ($44.8 billion) in assets under management.

WHY: Nestlé Chief Executive Mark Schneider put the skin health unit up for sale last September to “sharpen its focus on food, beverage, and nutritional health products.” The company decided that future opportunities for the skin health unit “lie increasingly outside the Group’s strategic scope.”

IN THEIR OWN WORDS: New Galderma CEO Dr. Flemming Ornskov, MD, MPH, commented: “The management and team at Nestlé Skin Health have done an excellent job creating a high-growth, leading dermatology business. I believe that Galderma, as a newly focused pureplay dermatology business, has outstanding prospects built on its existing quality portfolio, team and rich pipeline of innovation. I look forward to working with the talented Galderma team to further build on its success to date.”

DETAILS:

• Nestlé sold its skin health unit to a consortium of investors.
• The acquisition was led by a consortium comprising the EQT VIII fund (“EQT”), Luxinva (a wholly owned subsidiary of Abu Dhabi Investment Authority, “ADIA”), PSP Investments, and other renowned institutional investors.
• Nestlé Skin Health contributed about CHF 2.7 billion net sales in 2017, and the CHF 2.8 billion in 2018 only made up about 3% of the company’s total, according to Nestlé.
• According to Reuters, the price tag was attractive for Nestlé at an enterprise value-to-sales multiple of 3.6 times or a multiple of roughly 20 times expected core earnings.
• Dr. Flemming Ornskov, MD, MPH, assumes the position as CEO from Stuart Raetzman, who after having led Galderma and prepared the company for its separation from Nestlé, now joins the Company’s board.
• Thomas Dittrich joins Galderma as CFO, after co-leading Shire’s strong growth and cash flow generation as CFO.
• The company’s board is further reinvigorated with Thomas Ebeling, former CEO of Novartis Pharma, Novartis Consumer Health, and ProSiebenSat.1 Media AG joining as Chairman, and Sheri McCoy, former CEO of Avon Products and former Vice Chairman of Johnson & Johnson, where she was responsible for the pharma and consumer divisions, joining as a director.
• In 2014, Nestlé shelled out $3.6 billion to take full control of Galderma from joint venture partner L’Oréal in an attempt to diversify beyond its sluggish food business and march deeper into the more profitable health sector.
• Also in 2014 Nestlé bought the rights to several dermatology products from Valeant to gain several cosmetic products, including Restylane, for $1.4 billion.