Nestlé to Sell Half of Water Business to Platinum Equity in Paris-Based Joint Venture

The new company will operate under the name Peranel, with its headquarters in Paris. It will bring together more than 30 brands from Nestlé's mineral water portfolio. Beyond the flagship Italian and French labels, the portfolio also includes Henniez from Switzerland and global names such as Nestlé Pure Life. The two companies framed the joint venture as a way to combine Nestlé's brand heritage with Platinum Equity's investment and operational capabilities.

Nestlé's water business had been publicly earmarked for sale for some time. The Swiss food group first announced its intention to divest the unit roughly two years ago, then confirmed at the beginning of 2026 that a formal sales process was underway. Platinum Equity prevailed as the sole buyer; media had previously reported that other interested parties, including the investment firm KKR, had withdrawn from the purchase.

First-Half Financial Results

Completion of the transaction is expected in the first half of 2027. The deal remains subject to consultation procedures with trade unions and must still be approved by the relevant authorities. Until closing, Nestlé will continue to consolidate the water business in its accounts, and the two partners will operate the unit on a business-as-usual basis.

The Peranel announcement was paired with Nestlé's half-year results, which delivered a mixed picture for investors. In the first half of 2026, the company reported organic revenue growth of 3.6 percent compared with the previous year, driven by price increases and higher sales volumes, and accelerating slightly in the second quarter relative to the start of the year. In the prior-year period, the comparable figure was 2.9 percent.

On a nominal basis, however, revenue fell 2.5 percent year-over-year to 43.1 billion Swiss francs, equivalent to 46.4 billion euros. The nominal decline reflected negative foreign exchange effects that weighed on reported figures across the period.

Operating profit declined by almost 3 percent to just under 7.1 billion Swiss francs. The operating margin slipped slightly year-over-year to 16.4 percent. Analysts at UBS pointed to a one-off effect that contributed to the improvement of the operating margin; without that effect, the margin would have fallen by 40 basis points overall.

Outlook and Margin Guidance

Net profit told a starker story, dropping 31 percent to 3.5 billion Swiss francs. Nestlé attributed the decline to higher restructuring costs and a non-cash impairment of 1.3 billion Swiss francs, linked in part to the sale of the mineral water business. Separately, the net result was weighed down by impairments of approximately 1.4 billion Swiss francs related to assets classified as held for sale, including parts of the ice cream and vitamins and nutritional supplements businesses.

Profitability was further pressured by persistently high coffee and cocoa costs, the impact of US tariffs, and higher advertising investments. Nestlé is a competitor of Danone and Unilever, and the company said it benefited overall from growth in emerging markets and from increased demand for coffee and pet food.

For the full year 2026, Nestlé's management now expects organic revenue growth of "certainly" 3 to 4 percent, revised from the previously communicated "around 3 to 4 percent." Sales volume growth in 2026 is expected to rise compared with 2025. The company still anticipates an improvement in its operating margin relative to the prior-year level of 16.1 percent, but analysts at ZKB noted that the margin guidance was somewhat more cautious, with the margin expected in the second half to remain at a similar level to the first half rather than rising above it.

Nestlé CEO Philipp Navratil has framed the divestment as part of a broader effort to focus the company on fewer business areas. The restructuring push has been accompanied by the half-year results and by the announcement of the Peranel joint venture.

French Water Scandal and Factory Searches

Against the deal backdrop, a long-running scandal in France over allegedly impermissible treatment methods for mineral water that the Swiss company is said to have used has continued to cast a shadow over the unit. At the beginning of the year, police searched two Nestlé factories as part of the investigations. Those searches, alongside the negative publicity, have added to the case for divesting the water portfolio.

Market Reaction

Investors reacted coolly to the combination of results and the deal. Nestlé shares fell 6.5 percent to 80.59 Swiss francs in Zurich by late morning on the day of the announcement, as the market weighed the lower-than-expected profitability and the cautious margin outlook against the strategic logic of the partial sale.

Nestlé met analyst expectations with its first-half business figures, but the price action underscored that the company has more work to do to convince shareholders that the restructuring, including the disposal of marquee water brands, will translate into higher returns.

Looking ahead, the focus will shift to the consultations with trade unions and the regulatory approvals needed before Peranel can be formally established in the first half of 2027. The new joint venture's performance, and the eventual price at which its brands are repositioned, will be watched closely as a test of whether Nestlé's narrower portfolio can deliver the growth and margin expansion management has promised.