Nestlé, the largest packaged food company agreed to sell its US confectionery business to Ferrero, the largest Italian confectioner for $2.8 Bn in cash.
Nestlé has cited the unit’s weak competitive position in the USA, where it trails Hershey and Mars, as the main reason for the sale. Following the acquisition of Atrium in January, the large Swiss food group also continues its strategy toward healthier products. For the family-owned Ferrero, the deal is an opportunity to build scale quickly and boost its presence in the US confectionery market – the largest in the world, adding to its recent acquisitions of Fannie May Confections brands and Ferrara Candy Company. Ferrero, best known for its Ferrero Rocher chocolates, Nutella, Tic-Tacs and the Kinder brand, would become the third-largest chocolate company in the US and globally, according to Euromonitor International.
Nestlé’s US confectionery business represents ca. 3% of US Nestlé Group sales. It includes popular local brands such as Butterfinger, Crunch, Chunky, Raisinets, LaffyTaffy, PixyStix and more than 14 others. Nestlé’s press release highlights that the transaction covers only the US-focused confectionery brands and does not include the iconic Toll House baking products and the global brand KitKat, which the Company remains committed to developing.
Ferrero would also acquire Nestlé’s US manufacturing facilities in Bloomington, Franklin Park and Itasca and the confectionery-related employees.
The transaction is expected to close towards the end of first quarter of 2018, following completion of approvals and closing conditions.