Ferrero to buy Nestle’s US confectionery business for $2.8bn

Confectionery industry news : Italian chocolate manufacturer Ferrero has emerged as the buyer of Nestle‘s US confectionery business in a $2.8 billion deal.

Nestle for some time has been looking to sell its US confectionery business to focus on its core products.

Part of the transaction will be more than 20 Nestle US brands that include the Butterfinger, BabyRuth, Crunch, 100Grand, SnoCaps, Chunky and Raisinets chocolate brands, and also local sugar brands such as LaffyTaffy, SweeTarts, Gobstopper, BottleCaps and Nerds.

Lapo Civiletti – the CEO of the Ferrero Group, commenting on the latest Ferrero acquisition, said: “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 confectionary and chocolate brands.”

Ferrero aims to turn itself into the third largest confectionery manufacturer in the US market. Brands of the Italian chocolate manufacturer which are sold in the United States include Nutella, Tic Tac, Ferrero Roche, Ferrara Candy and the Fannie May.

As per the latest confectionery industry news, Ferrero will get its hands on Nestlé’s US manufacturing plants in Illinois, located in Bloomington, Itasca and Franklin Park.

All the employees associated with Nestle US confectionery business will be retained by Ferrero.

Giovanni Ferrero – the Executive Chairman of Ferrero Group, commenting on the acquisition, said: “In combination with Ferrero’s existing U.S. 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 confectionary and seasonal categories, and exciting new growth opportunities in the world’s largest confectionary market.

“We look forward to welcoming the talented team from Nestlé to Ferrero and to continuing to invest in and grow all of our products and brands in this key strategic and attractive market.”

The divested US confectionery business of Nestle contributes around 3% of the sales of the Nestle Group in the United States. In 2016, the confectionery business chipped in with nearly $900 million revenue for Nestle.

Nestle Headquarters in Vevey, Switzerland. Photo courtesy of Nestlé.

Commenting on the transaction, Mark Schneider – the CEO of Nestle said: “With Ferrero we have found an exceptional home for our U.S. 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.”

The sale will exclude the Toll House baking products of Nestle, which will be continued to be developed by the food and beverage manufacturer.

Nestle said that it will continue growing its confectionery activities in the rest of the world, particularly with KitKat, the globally popular chocolate bar brand.

The transaction is slated to be wrapped up around the end of Q1 2018 should it receive customary approvals and satisfy closing conditions.

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