Nestle boosts skincare biz with $1.4-bn Valeant deal

Written by Reuters | London/Zurich | Updated: May 30 2014, 02:27am hrs
Swiss food group Nestle stepped up its drive into the fast-growing skincare market on Wednesday, buying the rights to several treatments for facial lines and wrinkles from Valeant Pharmaceuticals International for $1.4 billion in cash.

The worlds biggest food group, with brands including KitKat chocolate bars, Gerber baby food and Nescafe coffee, signalled its ambitions in skincare in February by taking over the Galderma dermatology venture it had with LOreal.

Wednesdays move gives Nestle the North American rights to some products taken on in that deal, boosting its control of the brands and avoiding the situation with KitKat, to which rival Hershey owns the rights in the United States.

Citing data from GlobalData Facial Aesthetics, Vontobel analysts said the US market for Botox and other wrinkle fillers, is set to grow from $2.5 billion in 2013 to $4.7 billion in 2018 compound annual growth of 13.5%.

These figures speak for themselves and explain how strategic the deal is for Nestle/Galderma, the analysts said in a research note. Nestle did not want to be in a similar situation as for Hershey (with KitKat).

European food groups, struggling with weak economies, are increasingly moving into health and personal care markets in pursuit of higher growth and margins. Unilever, for example, has been selling underperforming food brands and putting more focus on personal care products such as soap and shampoo.

Nestle said the deal with Canadas Valeant would give it the US and Canadian rights to sell the Restylane, Perlane and Emervel cosmetic facial treatments it already manufactures, as well as Dysport, a cosmetic treatment owned by Ipsen. It is also acquiring from Valeant a dermal filler for cosmetic and medical use called Sculptra.

Quebec-based Valeant, which inherited the North American rights in its 2012 acquisition of Medicis, said the deal was not contingent on the success of its bid for US drug company Allergan.

The Canadian firm increased its offer for Allergan, whose biggest product is botulinum toxin, or Botox, a few hours after announcing the deal with Nestle.