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Nestle sells stake in Givaudan

By Chris BARKER , 12-Dec-2013

Nestle has announced that it will sell its entire 10% stake in fragrance and flavour giant Givaudan. 

The food manufacturer's stake made it the second-largest shareholder in Givaudan, with the company controlling a total of 926,562 shares. The shares will not be sold on the open market but through "a private placement to institutional investors such as pension funds."

According to a report by Reuters, the current sale is being managed by a branch of Goldman Sachs.

The food giant is reportedly shedding under-performing businesses in order to improve its operating strength, with rumors flying concerning its 30% state in cosmetics giant L’Oreal.

Nestle divests underperforming businesses

Nestle reported relatively low sales improvements in its first half financial results for 2013, with growth reduced by 2.5% compared to 2012, although sales in emerging markets picked up in Q3.

In response, the food and beverage company has lowered its organic growth targets for the year and divested a number of businesses, including the majority of its shares in weight-loss company Jenny Craig in November.    

There has been speculation that Nestle may end its relationship with L'Oreal, the world's largest cosmetics company, after chairman Peter Brabeck announced that they would not renew their right of first refusal with the company. This move would free up €22bn in cash for Nestle and could lead to a share buyback by L'Oreal. 

Givaudan's stake

Nestle, which was formerly Givaudan's second-largest stakeholder, originally acquired the shares in 2002 as part of a strategic move to sell its food ingredient company to the firm.

Givaudan is the largest company in terms of market share in the fragrance and flavour in the world. Its perfumery department, founded in 1946, focuses on developing molecules from biological sources such as plants, fruits, flowers and spices. They employ "green chemistry, atom economy and sustainability" in developing new products. 

The fragrance and flavour firm's share price reportedly went down by as much as 5% in the wake of the announcement, according to a report by Bloomberg.

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