Nestle, mooted as a possible bidder for Lindt & Sprungli in 2010, could face questions over its commitment to health and wellness should it make a move for the upmarket chocolatier, one analyst has told just-food.
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On Friday (13 November), Nestle was named as the “most likely” candidate to buy Lindt, which, according to Kepler Capital Markets analyst Jon Cox, is the chocolate sector’s “obvious” takeover target.
Cox cut his estimate for Lindt’s share price in 2010, citing the pressure rising cocoa costs will put on margins, and warned the group could issue a profit warning when it reports its annual results next March.
Lindt’s financial predicament, Cox argued, made the company a likely target for confectioners looking to bolster their presence in the more expensive parts of the category – including Nestle and Mars Inc.
However, Philip Gorham, an analyst at US researchers Morningstar, said premium chocolate remains “attractive” for Nestle but insisted the group’s publicly stated aim to focus on health and wellness may not fit with any move for Lindt.
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By GlobalData“Nestle has said that it wants to reposition its portfolio in health and wellness categories,” Gorham told just-food.
“Taken at face value, I think this is a sensible strategy – health and wellness is the fastest-growing category in mature markets, and will likely continue to offer long-term growth. If Nestle were to continue to acquire confectionery companies such as Lindt, investors might question how committed management really is to shifting Nestle’s portfolio to health and wellness categories.”
Putting aside speculation over Nestle’s strategic direction, the make-up of Lindt’s share register is also seen as an obstacle to any sale of the business.
The Lindt pension board, which is headed by CEO Ernst Tanner, controls around 15% of the company’s voting rights – with a further 10% held by the founding families behind the business and its management.
Nevertheless, Cox believes such obstacles could be “overcome”. He said: “Key would be wooing Lindt’s long-term management team, particularly chairman and CEO Ernst Tanner, who also sits on the Lindt pension board.”
