J&J hires Goldman to explore sale of Splenda, say sources-Reuters

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

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

Johnson & Johnson (J&J) declined to comment. Goldman Sachs was not immediately available.

The business, which has annual revenue of around $300 million, is likely to attract interest from private equity buyers because it generates strong cash flows and good margins, according to 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), which continues to supply J&J with sucralose.

Low-calorie sweeteners such as Splenda are in high demand as packaged food and drink makers reformulate products amid rising levels of obesity in the developed world.

But natural sweeteners such as stevia have recently garnered more interest, with Coca-Cola (KO.N) and PepsiCo (PEP.N) launching stevia-sweetened versions of their flagship colas.

In October, Merisant, the maker of rival sweetener products Equal and Canderel, was sold to licorice ingredients maker Flavors Holding for an undisclosed sum.

Photo courtesy of Precision Nutrition.