Nestlé to gauge interest from Smithfield, Cargill for Herta

HONG KONG • Nestlé SA’s sale of its Herta lunch-meat business may attract interest from bidders including US packaged meat company Smithfield Foods Inc and agricultural commodities giant Cargill Inc, according to people with knowledge of the matter.

The Swiss company plans to send marketing material this month to potential investors including Tyson Foods Inc, China’s Cofco Corp and Sigma Alimentos SA de CV of Mexico, said the people.

Nestlé is working with an advisor to dispose of the hot dog brand, in a deal that could value the unit at US$800 million to US$1 billion (RM4.09 billion), said the people, who asked not to be identified as the information is private.

Deliberations are at an early stage and there’s no guarantee the talks will lead to a transaction, the people said. Buyout firms could also join the bidding, they added.

Representatives for Nestlé, Cargill and Tyson declined to comment. A representative for Smithfield — the world’s biggest hog producer and owned by China’s WH Group — also declined to comment. Representatives for Cofco and Sigma didn’t respond to requests for comment.

Nestlé in February announced that it’s putting the lunch-meat business up for sale as CEO Mark Schneider came under pressure from activist shareholder Dan Loeb to boost returns. The plan also follows the rise of health-conscious consumers, pushing Nestlé further into plant-based alternatives for protein. — Bloomberg