May 28 - Nestle is continuing its ''wellness'' transformation by buying the rights to several skin products from Canada's Valeant for $1.4 bln in cash. Ivor Bennett examines the deal and the trend away from food
It's best known for its coffee and chocolate but Nestle now wants to look good too. The Swiss food giant is boosting its skincare business by buying the rights to numerous products. It's paying $1.4 billion in cash to Canada's Valeant Pharmaceuticals International. Robert Cole is from Reuters Breakingviews. SOUNDBITE (English) ROBERT COLE, REUTERS BREAKINGVIEWS, SAYING: "Yes, it's a good deal for Nestle because it gives them greater heft in this new skincare operation that they're doing." The move to healthcare began in February when Nestle took over the Galderma joint venture it had with L'Oreal. It hinted then more would follow. Under the agreement with Valeant, Nestle will be able to sell a string of medical skincare products - including anti-wrinkle creams - in the US and Canada. It'll prevent a repeat of the Kitkat situation - the Nestle snack rival Hershey has the rights to in the States. It'll also give them greater access to a market which is reportedly growing at a rate of 13.5 percent a year and is expected to be worth $4.7 billion by 2018. SOUNDBITE (English) ROBERT COLE, REUTERS BREAKINGVIEWS, SAYING: "I always think of Nestle of being a sort of inherently cautious Swiss company. Huge of course, and much bigger than many people think. But the last six months, it's shown itself to be taking a few little risks really. And of course that's precisely, as long as they're measured, the right thing to do because it needs to explore some new business opportunities." Weak European economies have hit Nestle and other food groups hard in recent years. Unilever too is re-focusing, selling off underperforming food brands in favour of personal care products like shampoos and soaps. Valeant says the deal does not affect its bid for U.S. drug firm Allergan. It upped its offer for the botox maker just hours after announcing the Nestle deal.