Nestle’s Buyback May Signal No Big Buy, Analysts Say

Nestle SA will buy back 10 billion francs ($9.6 billion) of stock after selling its stake in Alcon Inc., signaling the food company may have no imminent plans to buy a company the size of Cadbury Plc, analysts said.

The two-year buyback will begin once an existing 25 billion-franc program ends this year, Nestle said. The KitKat maker made the announcement earlier than anticipated since the current program still has months to go. Nestle may boost the buyback amount at a later date, Standard & Poor’s analyst Olaf Toelke said.

“Nestle appears not to be too hasty to make large acquisitions,” said Toelke, who rates the company’s long-term debt AA with a “stable” outlook. The most likely outcome is a “gradual erosion of cash” returned to shareholders and through smaller acquisitions, he added.

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- Posted: 2010-01-04 11:14:34

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