Nestle CEO open to doing a 'big deal' after cutting L'Oreal stake

The CEO of Swiss food and beverage giant Nestle has said it would be open to doing a “big deal” as it reasserts its growth strategy after cutting its stake in French cosmetics business L’Oreal.

Mark Schneider, CEO of the company responsible for household brands including Nescafe and Kit Kat, told CNBC that while it is not “compelled” to make any acquisitions, it is certainly considering all options as part of its overall growth strategy.

“We would be open to do a big deal again,” Schneider told Julianna Tatelbaum Thursday. “Do we feel compelled to do one? No. Are we open to it? Yes.”

Nestle cut its stake in L’Oreal to 20.1% from 23.3% in December, selling back 8.9 billion euros ($10 billion) of shares amid scrutiny over its influence on the cosmetics brand.

Alongside potential large deals, Schneider also said the business would consider smaller acquisitions with fewer regulatory challenges.

“It’s not that we prioritize one over the other. It’s really all driven by does it make strategic sense? Does it make cultural sense? And then we go and take a closer look,” he said.

Schneider added that in the current market, where assets are fully valued, smaller and medium-sized deals would likely offer better returns.

“Buying at the right price, to me, is the starting point of successful M&A activity,” he continued. “So it’s not a change in policy, it’s simply just a reaffirmation of the fact that yes, we want to build our business and this includes acquisitions, just like internal growth.”

Nestle released its full-year financial results Thursday, reporting organic growth of 7.5%, exceeding expectations. Sales for the year grew 3.3% to 87.1 billion Swiss francs ($94.5 billion).

The company said it is forecasting more modest growth of around 5% in 2022 amid ongoing cost pressures.

Nestle’s shares were down 1.1% in early trade.