July 2, 2018

Nestle angles for majority stake in Champion Foods

On July 2, the Wall Street Journal reported that Swiss food and beverage company Nestle SA is in talks to buy a majority stake in Canadian pet food manufacturer Champion Pet Foods. Citing sources familiar with the matter, it reported that the deal is valued at more than $2 billion. Nestle is in talks with Champion Foods’ owners, including Toronto-based buyout firm Bedford Capital.

Recently Nestle was on the receiving end of some harsh criticism from top hedge fund manager Dan Loeb, whose activist fund Third Point has a $3.5 billion stake in the company.  “Nestle’s insular, complacent and bureaucratic organization is overly complex, lethargic and misses too many trends,” Loeb wrote in a letter to the company’s top management that was made public on Sunday. He called the company’s strategy muddled and said he would push for a new one to increase sales and profitability. The maker of KitKat and Haagen-Dazs saw its slowest sales increase in decades with a 2.4% uptick in 2017.

With consumers gravitating to healthier and more conscientious food choices, companies such as Nestle are looking to the lucrative pet food industry to boost their profits. Recently, General Mills acquired Blue Buffalo for $8 billion and J. M. Smucker bought Ainsworth Pet Nutrition with its Rachel Ray Nutrish line.


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