Exclusive: J&J hires Goldman to explore sale of Splenda - sources

Wed Dec 3, 2014 12:07pm EST
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By Olivia Oran, Anjuli Davies and Martinne Geller

NEW YORK/LONDON (Reuters) - U.S. healthcare company Johnson & Johnson (JNJ.N: Quote) has hired Goldman Sachs (GS.N: Quote) to explore a sale of its artificial sweetener brand Splenda, sources familiar with the matter told Reuters.

Such a move would let Johnson & Johnson, maker of prescription drugs, medical devices and baby shampoo, exit a business beset by weakened soft drink sales and intense competition.

The process is at an early stage, with prospective buyers signing non-disclosure agreements, one of the sources said on Wednesday, speaking on condition of anonymity because the matter is private.

Johnson & Johnson (J&J) and Goldman Sachs declined to comment.

The business, which has annual revenue of around $300 million, could attract interest from private equity buyers because it generates strong cash flows and good margins, according to the sources.

"But there is no obvious strategic buyer (from the food or ingredients sectors) because high-intensity sweeteners are not that attractive at the moment,” according to one of the sources.

Splenda, an artificial sweetener made from sucralose, was jointly developed by J&J subsidiary McNeil Nutritionals and British ingredients firm Tate & Lyle (TATE.L: Quote), which continues to supply the sucralose.

Tate, which also declined to comment, in September forecast sucralose prices would be down about 25 percent this year, saying it had to renegotiate supply contracts at lower prices to protect market share from cheaper Chinese rivals.   Continued...

Products made by Johnson & Johnson for sale on a store shelf in Westminster, Colorado April 14, 2009.  REUTERS/Rick Wilking