Nestle SA’s relatively new Chief Executive Officer Mark Schneider has shown he knows how to buy. Now he needs to sell too.

Schneider, who was something of a deal junkie when he ran Fresenius SE, wasted no time in his first year at Nestle, snapping up the likes of supplement maker Atrium Innovations and Blue Bottle Coffee. He also took his first step in reshaping the global group’s disparate portfolio, offloading the U.S. confectionery business for a good price.

But he needs to go further. Organic sales growth in 2017, at 2.4 percent, was the weakest in more than 20 years. It would be an easy win for shareholders if he were to whittle away the poorer or less-important performers to focus on the core business. That would bring in a load of cash, and if supplemented with mid-sized acquisitions of fast-growing businesses, would also put Schneider in a much better position of achieving his target for mid single-digit growth by 2020.

Nestle said on Thursday it would explore options for its tiny Gerber life assurance business. That’s in line with its strategy of offloading assets representing 10 percent of group sales.  Deals so far mean its tackled 2.5 to 3 percent of sales. 

But the group has several joint ventures, including with Lactalis in chilled dairy, with General Mills Inc. in cereals and with R&R in ice-cream. All fall outside of Nestle’s priority areas, such as pet care, coffee, infant nutrition and water, and so are ripe for corporate activity.

Meanwhile, Nestle’s foray into skin health looks increasingly marginal. The company wrote down the value of this unit, a possible prelude to a sale.

Still, there is one potential divestment that stands out: Nestle’s stake in L’Oreal.

Nestle won’t renew an expiring agreement with the Bettencourt family, which prevents either side from raising their stake. Nestle said Thursday it won’t increase its holding, so ruling out a bid for the cosmetics group.

And with the Bettencourts soon free to increase their stake, they’re potential buyers for some of Nestle’s shares. So is L’Oreal, which said last week it was ready to snap it up.

Taking these steps will leave Nestle, which is already highly cash generative and under-leveraged, with a whopping pile of funds. The L’Oreal investment alone is worth 23 billion euros ($28.7 billion). That’s before any other disposal proceeds come in.

The question is what Schneider does with the money. It’s a nice problem to have, and gives him options in a sluggish environment. 

But with Dan Loeb’s Third Point having amassed a $3.5 billion stake, there will be demands for any surplus funds to be returned to shareholders. 

Schneider hasn’t ruled out large scale M&A, and although remote, there is a danger he deviates from his path so far of buying smaller, fast-growing companies to bigger, riskier deals.

He has set out a sensible strategic plan, and embarked on many of courses of action urged by Loeb. But Nestle has underperformed Unilever NV over the past year. Schneider has the opportunity to be much more radical. With an activist snapping at his heels, he should take it.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

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