Nestlé sells US confectionery business to Ferrero

Swiss food giant Nestlé has agreed to sell its US confectionery business to Ferrero for $2.8 billion.

With this transaction, Ferrero will become the third largest confectionery company in the US market, where it is best known for Tic Tac breath mints, Ferrero Rocher pralines, Nutella hazelnut spreads, the Fannie May and Harry London chocolate brands, and the Ferrara Candy Company, which was recently acquired by a Ferrero affiliated company and whose portfolio of brands includes Trolli, Brach’s and Black Forest Gummies.

Nestlé’s US confectionery business represents around 3% of US Nestlé group sales. It includes local chocolate brands such as Butterfinger, Crunch, BabyRuth, 100Grand, Raisinets, Chunky, OhHenry! and SnoCaps, as well as local sugar brands such as SweeTarts, LaffyTaffy, Nerds, FunDip, PixyStix, Gobstopper, BottleCaps, Spree and Runts. The group’s US confectionery business generated sales of around $900m in 2016.

Ferrero will acquire Nestlé’s US manufacturing facilities in Bloomington, Franklin Park and Itasca, Illinois, and the confectionery related employees, and will continue to operate through the offices in Glendale, California, as well as from its other current locations in Illinois and in New Jersey.

Nestlé CEO Mark Schneider says, “With Ferrero we have found an exceptional home for our US confectionery business where it will thrive. At the same time, this move allows Nestlé to invest and innovate across a range of categories where we see strong future growth and hold leadership positions, such as pet care, bottled water, coffee, frozen meals and infant nutrition.”

Giovanni Ferrero, executive chairman of the Ferrero Group, adds, “In combination with Ferrero’s existing US presence, including the recently acquired Fannie May Confections Brands and the Ferrara Candy Company, we will have substantially greater scale, a broader offering of high quality products to customers across the chocolate snack, sugar confectionery and seasonal categories, and exciting new growth opportunities in the world’s largest confectionery market.

While Lapo Civiletti, CEO of the Ferrero Group, notes, “Our commitment to deliver value to the North American consumers and customers will be strongly enhanced by the arrival in our portfolio of such powerful confectionery and chocolate brands.”

The transaction covers the US focused confectionery brands only and does not include Nestlé’s iconic Toll House baking products, a strategic growth brand which the company will continue to develop. Nestlé says it remains fully committed to growing its leading international confectionery activities around the world, particularly its global brand KitKat.

The transaction is expected to close around the end of the first quarter of 2018 following the completion of customary approvals and closing conditions.

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