Nestle boosts skincare business with $1.4bn Valeant deal

The world’s 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 L’Oreal.

Wednesday’s 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. Nestle makes KitKats at its factory in York.

Analysts said the US market for Botox and other wrinkle fillers, is set to grow from $2.5bn in 2013 to $4.7bn in 2018 - compound annual growth of 13.5 per cent.

“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 Canada’s 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.

Nestle chairman Peter Brabeck-Letmathe said the deal would provide consumers with life-enhancing scientific products.

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.