Latham & Watkins is acting alongside US counterpart Kirkland & Ellis in advising EQT as the private equity house looks to acquire Nestlé’s skincare business, in what could be one of the largest transactions in Europe this year.
Nestlé, which is being advised by Linklaters corporate partners David Martin and Michael Honan, confirmed talks with EQT in May following a competitive auction process with rival buyout funds and industry players all eager to make the acquisition. The group of investors includes Canada’s Public Sector Pension Investment Board and the Abu Dhabi Investment Authority.
Kirkland private equity partner Roger Johnson led the team advising EQT on the merger, while Latham advised on the financing, led by London partners Dominic Newcomb and Jennifer Engelhardt. Rothschild & Co and PwC acted as financial advisers to the consortium of investors, while Credit Suisse and Evercore also advised Nestlé on the sale.
‘The deal is one of the largest financing packages put together for the year, so it shows a certain health in the leveraged finance market.’
Dominic Newcomb, Latham & Watkins
‘The most significant part of the deal is its size,’ said Latham’s Newcomb. ‘It’s one of the largest financing packages put together for the year, so it shows a certain health in the leveraged finance market.’
The skincare unit was founded in 1981 as Galderma and employs roughly 5,000 people. The company is expected to keep its headquarters in Switzerland but is to be returned to its original name Galderma. In 2018 the business generated sales amounting to $2.7bn. Meanwhile, EQT’s bid was preferred as it looked to acquire all three major divisions within the business, with competitors offering a less comprehensive package.
The skincare unit was put up for sale last September, and EQT suggests the business will be scaled up in the coming years should the deal go ahead. For Nestlé, the disposal suggests a slimming down of its assets, with some expecting a similar announcement regarding its stake in L’Oréal. The deal transaction is subject to customary approvals and employee consultations. Despite the size of the deal, Newcomb does not believe it heralds an imminent trend.
‘Soon we’ll get the half-year figures and my gut feeling is, in terms of deal numbers, things will be below where they have been in recent years.’