Nestlé

Nestlé agreed to sell its mainstream vitamins business to Yellow Wood Partners for USD 1bn.

Financially, the transaction remains relatively small, with the business generating USD 1.2bn of sales in 2025, representing around 1% of group sales. Strategically, the announcement is not new, as Nestlé had already launched a strategic review of the business in H1 2025.

The transaction fits with Nestlé’s broader objective of building a sharper and more focused portfolio. Following the Waters JV announced in July, the Group continues to simplify its business mix by exiting more commoditised, less differentiated activities, while retaining exposure to the more premium and attractive parts of its portfolio. In vitamins, minerals and supplements (VMS) specifically, this means keeping its premium, science-led brands while divesting its mainstream and private-label activities, which had also been experiencing weaker performance than the premium part of the category.

Overall, while the transaction is financially small, it is consistent with Nestlé’s ongoing portfolio simplification strategy, with the Group concentrating resources on areas where it believes it has the strongest competitive advantages.

Expert Opinion:
While we retain a cautious stance on the name,  we start to warm up to the idea of a long Nestlé. Today's deal is small and not financially meaningful, but demonstrates that management is efficiently executing the strategy, which is to refocus on a more limited number of categories and products.

So far, the market doesn't seem to like it, but we think it goes in the right direction. Valuation isn't a given for sure with Nestle trading at 17x PE17 down to 15.3x for PE18 and a dividend of c4%. But Nestlé still offers a rather defensive profile with a very strong ROCE. We expect investors will gradually rediscover the beauty of Nestle, (once a darling of equity markets), especially if the equity markets become more hectic. We would be tempted to start buying and hold for the long run.