LUXEMBOURG — The Ferrero Group, the owner of such brands as Nutella, Kinder and Tic Tac, has entered into an agreement to acquire Nestle S.A.’s U.S. confectionery business for about $2.8 billion in cash. The transaction is expected to close near the end of the first quarter of 2018 following the completion of customary approvals and closing conditions.
Nestle’s U.S. confectionery unit represents about 3% of U.S. Nestle Group sales and includes such brands as Butterfinger, Baby Ruth, Skinny Cow, Raisinets, Laffy Taffy, Nerds, SweeTarts and others. The business had sales of $900 million in 2016.
Vevey, Switzerland-based Nestle announced plans of a potential sale of the unit last June to focus on high-growth food and beverage categories such as coffee, pet care, infant nutrition and bottled water. At the time of the announcement, the company said it remains fully committed to growing its international confectionery activities around the world, particularly global brand KitKat. The transaction does not include Nestle's Toll House baking products.
|Mark Schneider, c.e.o. of Nestle|
“With Ferrero we have found an exceptional home for our U.S. confectionery business where it will thrive,” said Mark Schneider, chief executive officer of Nestle.
In 2017, Nestle ranked fourth in U.S. confectionery market share with 4.6% of the market, according to data from Nielsen for the 52 weeks ended July 8, 2017. Category leaders included The Hershey Co. (44.6%), Mars Inc. (29.2%), and Lindt/Ghirardelli (4.6%).
Hershey was reportedly a bidder for Nestle’s U.S. candy business, but the company’s pending acquisition of SkinnyPop parent Amplify Snack Brands for $1.6 billion suggests the company is moving in another strategic direction.
Meanwhile, Ferrero has been building a confectionery empire in the United States with last year's acquisitions of Fannie May Confections and Ferrara Candy Co. A successful transaction would make Ferrero the third largest player in chocolate confectionery in the United States, said Raphael Moreau, senior food and nutrition analyst at Euromonitor International, before the deal was officially announced, but noted, “as Nestle’s brands are not positioned as premium as Ferrero’s brands, their turnaround and a successful integration into Ferrero’s brand portfolio would be uncertain.”
Ferrero will acquire Nestle’s U.S. manufacturing facilities in Bloomington, Franklin Park and Itasca, Ill., and the confectionery-related employees will continue to operate through the offices in Glendale, Calif., and other current locations in Illinois and New Jersey, according to Ferrero.
|Giovanni Ferrero, executive chairman of the Ferrero Group|