Nestle SA share price down, to explore different options for its frozen-products unit Davigel European

The largest food company by sales in the world – Nestle SA said on Friday that it is trying to find a partner for its frozen-products division Davigel European as one of a variety of strategic options for its business.

“This mainly involves identifying a partner to help Davigel in its next stage of growth while safeguarding the best interests of employees, customers and shareholders” the company said in a statement.

Nestles Davigel unit, which in 2012 generated sales of €783 million, has been facing difficulties due to the slowdown in European economies. According to some analysts, the business could bring about €300 million, if sold. Nestle, however, refused to make any comments on a potential sale of the division and, respectively, at what price.

Nestle has had Davigel as part of the company since it acquired the units parent company Buitoni in the late 1980s. An investment, estimated to €40 million, which was planned to be used for the expansion of a French Davigel factory was revealed by the Switzerland-based company in April last year. Nestles Davigel division was estimated by the analyst Patrik Schwendimann, who works at Zuercher Kantonalbank, to have a profit margin of about 4%. In comparison, the overall margin of the food company is almost 19%.

Chris Hogg, a spokesman of the company, said in a statement, cited by the Wall Street Journal: “Nestlé is exploring different options for the development of Davigel.” Mr. Hogg also added that Davigel differs from the rest of Nestles businesses, which means it “may not benefit from the group’s priority investments”. That is why finding an appropriate partner is a priority for Nestle in order “to help Davigel in its next stage of growth”.

Nestle SA fell 0.07% on Friday in Zurich to close at at CHF71.45 per share, marking a one-year change of +6.88%. The company is valued at CHF230.41 billion. According to the Financial Times, the 23 analysts offering 12-month price targets for Nestle SA have a median target of CHF70.00, with a high estimate of CHF80.00 and a low estimate of CHF63.00. The median estimate represents a -2.03% decrease from the last price of CHF71.45.