Nestle sells Jenny Craig weight-loss brand to equity firm

Maybe a company that sells chocolate bars and hot cocoa was never meant to operate a weight-loss business.

Nestle, the world’s largest food company, has agreed to sell most of its Jenny Craig holdings to a private equity firm for an undisclosed amount.

The Swiss company said it would sell Jenny Craig operations in North America, Australia and New Zealand to North Castle Partners. The Greenwich, Conn., firm will combine Jenny Craig with its Curves fitness clubs for women.

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The price was probably less than the approximately $600 million Nestle paid in 2006, analysts at Natixis and SNS Securities said.

Nestle Chief Executive Paul Bulcke said last month that the company was identifying a list of underperforming businesses to sell. Analysts had identified Jenny Craig as a possible candidate to be unloaded, along with PowerBar energy snacks, Lean Cuisine frozen meals and Herta meats, Bloomberg News reported.

Jenny Craig sells diet food and offers nutrition consultants at weight-loss centers around the country and online.

The brand has been a “perennial underperformer” since it was acquired, according to Eddy Hargreaves, an analyst at Canaccord Genuity in London.

Boston University management professor Samina Karim, who closely follows corporate restructuring and strategy, said she thought the deal made sense for both sides.

“I was always skeptical about Nestle’s acquisition of Jenny Craig,” Karim said. “Though Nestle makes nutritional and weight-loss foods, running a brick-and-mortar consumer business poses different challenges.

“This divestiture makes sense for all parties involved. North Castle understands both the wellness industry and how to manage fitness [and] gym businesses. It will likely create more value from Jenny Craig than Nestle ever could.”

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