By Olivia Oran and Martinne Geller
NEW YORK/LONDON, Oct 8 (Reuters) - Nestle islooking to sell its Jenny Craig diet business and is speaking toa small group of potential buyers about the brand, according tothree sources familiar with the matter.
The sources, who declined to be identified as talks areprivate, said on Tuesday that Nestle was working with GoldmanSachs on the sale process.
Nestle and Goldman Sachs declined to comment.
The potential sale comes after the world's largest foodgroup said last week that divesting low-performing businesseswas a top strategic priority. CEO Paul Bulcke said that somebusinesses had been a drag for too long.
Reuters reported last month that Nestle was also looking todivest its PowerBar energy bar business.
Other challenged areas that analysts point to as being ripefor pruning include Nestle's ice cream, frozen foods and waterbusinesses. Liberum Capital suggests that Nestle could also sellits table and cooking sauces business, as well as its stake inL'Oreal cosmetics.
Nestle bought Jenny Craig in 2006 for $600 million fromprivate equity groups ACI Capital and MidOcean Partners as partof its push into nutrition.
The brand, which operates weight loss centers and sellspackaged food under the Jenny Craig name, has been hit by theeconomic slowdown as many consumers have cut back spending onthemselves.
Like rival Weight Watchers International, JennyCraig's business model has also been pressured by an influx of free online and mobile fitness apps that allow consumers to loseweight on their own without spending on diet programs.
In an August earnings call, Nestle Chief Financial OfficerWan Ling Martello said, "We do not disclose profit bybusinesses, but I will tell you that the Jenny Craig business -this year as well as last year - was very much below ourexpectations and below what they have been able to do in thelast few years."
The brand was founded in 1983 in Australia by Jenny Craigand her husband Sid. Besides Weight Watchers, it competes withNutrisystem Inc., Medifast and Herbalife and has operations in the United States, Canada,Australia, New Zealand and France.
- Consumer Discretionary
- Jenny Craig
- Goldman Sachs