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Nestlé’s decision to sell half its water business to Platinum Equity is the latest sign of a European carveout wave, as corporates, squeezed by a higher cost of capital, shed units that no longer earn their keep.
The deal values the business at €4.9 billion (about $5.6 billion) and hands Nestlé about €3 billion in cash. Under the deal, Nestlé will form a joint venture with Platinum that will operate as an independent, Paris-headquartered company spanning more than 30 brands, including S.Pellegrino, Source Perrier and Nestlé Pure Life.
The transaction comes just three months after Nestlé confirmed the sale of Blue Bottle Coffee to Centurium Capital, the majority shareholder of China’s Luckin Coffee, as part of the Swiss food multinational’s ongoing push to concentrate on its core businesses.
European PE carveouts generated €41.8 billion in deal value this year through July 23, according to PitchBook. If the pace continues, deal value could reach €74.8 billion, putting 2026 among the strongest years on record for carveout value, trailing only 2019’s €85.3 billion and 2024’s €79.5 billion.
Deal count, however, is lagging: 417 so far this year tracks well behind 2025’s record 818, suggesting fewer, larger transactions rather than a broader rebound in activity.
According to PitchBook’s 2025 Annual European PE Breakdown, a higher cost of capital since 2022 has sharpened corporates’ focus on balance-sheet strength, pushing them to sell noncore or slower-growing units rather than carry them through a period of costlier debt.
The same financing squeeze has also made highly leveraged sponsor-to-sponsor deals harder to underwrite, so PE firms have turned to carveouts, which can build returns on operational fixes rather than financial engineering.
Connor Kohlenberg, partner in M&A at West Monroe, said the M&A momentum extended beyond non-core assets.
“As public large businesses need to reprioritize in their core, they are starting to clean shop a bit,” he said. “We will continue to see plenty of them, whether it is a non‑priority asset or it is a really innovative business unit that can demand a high multiple.”
Some recent PE carveout deals in Europe include TPG‘s acquisition of UnitedHealth Group‘s Optum UK business in April for €1.5 billion. Apollo Global Management also acquired the Interiors Business Group from France-based automotive technology supplier Forvia at an enterprise value of €1.82 billion in the same month.
This article originally appeared on PitchBook News