Nestlé Has A $20 Billion War Chest—And Here’s How It Could Be Returned To Shareholders

Food & Drink

Topline: Following years of slowing growth, Nestlé, one of the world’s largest food companies, has been overhauling its business in recent months, and on Thursday announced that it now has a $20 billion war chest that it can return to investors or spend on new acquisitions in the next few years.

  • The Swiss-based consumer giant said in its latest earnings report that the company will distribute a good deal of money back to shareholders over the next two years, with a new stock buyback program starting in January 2020 that could be complemented by special dividends.
  • Nestlé is sitting on a big cash pile after selling a skin-care health unit for just over $10 billion earlier this month.
  • The company indicated that it would spend some of that money on new acquisitions as part of its overall effort to get its business back on track with faster growth and better profit margins.
  • Nestlé has been ditching underperforming businesses after coming under fire from activist investor Daniel Loeb and his hedge fund Third Point back in July.
  • The 153-year-old brand has increasingly been investing in health and personal nutrition: One of its subsidiary divisions, Nestlé Health Science, recently bought Persona, a personalized vitamin startup that delivers straight to customers’ doors.
  • Earlier this year, Nestlé also started selling Starbucks coffee and teas in 34 countries after signing a $7.15 billion cash deal for the exclusive rights to do so.

Key background: On Thursday, the company announced sales of more than $68 billion for the first nine months of the year, which was in line with its goal of expanding revenue. “We are pleased with our nine-month results and have made further progress towards our 2020 financial goals,” CEO Mark Schneider said in a statement.

Crucial statistic: Nestlé stock hit an all-time high in September and is up by over 30% so far this year.

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