Nestle to Sell Gerber Life Insurance Unit for $1.55 Billion

(Bloomberg) -- Nestle SA agreed to sell Gerber Life Insurance to closely held Western & Southern Financial Group for $1.55 billion in cash as the world’s largest food company focuses on businesses like coffee, bottled water and pet care.

“This move is part of the ongoing evolution of our portfolio,” Nestle Chief Executive Officer Mark Schneider said Monday in a statement. “It will allow us to invest further in our core food and beverage business and in consumer health care.”

Gerber Life had sales of $856 million last year, and statutory capital and surplus of about $285 million as of June 30, Nestle said. While the transaction doesn’t include Nestle’s Gerber Products business, which houses the baby food and baby-care products, the Ohio-based buyer will market life policies under the Gerber brand.

“This is a good deal for Nestle as it sells a noncore business for a decent price,” Alain Oberhuber, an analyst at MainFirst Bank AG, wrote in a note. He added market expectations called for about $1 billion.

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Nestle, which has been under pressure from activist investor Dan Loeb, is exiting the insurance business because it’s not core to the consumer operations, Chief Financial Officer Francois-Xavier Roger said in a February conference call. Insurance operations tend to be capital-intensive and require significant regulatory supervision. Gerber, acquired in 2007 from Swiss drugmaker Novartis AG, is mostly a book of policies for children.

The transaction moves Nestle closer toward its goal of transforming 10 percent of its portfolio’s total revenue through acquisitions and divestments, and follows the sale of its U.S. confectionery business. The deal is expected to be completed in late 2018 or early 2019, according to the statement.

--With assistance from Lisa Wolfson.

To contact the reporter on this story: Sonali Basak in New York at sbasak7@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Eric Pfanner, John J. Edwards III

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