Ferrero close to buying Nestlé’s US confectionery unit

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Ferrero is reportedly close to buying Nestlé’s US confectionery business in a deal which is expected to reach $2.8 billion.

The Italian company, which produces Nutella, Tic Tacs and Ferrero Rocher, is keen to expand its business in the US following last year’s purchases of Ferrara Candy – the third-largest manufacturer of non-chocolate confectionery in the US – and boxed chocolate company Fannie May.

It has come out on top in an action process to acquire the Nestlé unit, ahead of Hershey, and an agreement could be signed as early as Sunday, according to Bloomberg.

If a deal does go ahead, it would make Ferrero the third-largest confectioner in the US, after Mars and Hershey. Other brands within the Nestlé US confectionery portfolio include SweeTarts, Nerds, 100Grand, SkinnyCow, Raisinets, Chunky, OhHenry! and Baby Ruth.

Last month, Hershey bought Tyrrells and Skinny Pop owner Amplify Snack Brands in a deal worth around $1.6 billion as it expands away from high-sugar foods.

Nestlé announced last June that it was considering putting its confectionery business up for sale. The unit generated $924 million in sales last year.

The world’s biggest food company has been under pressure to sell underperforming areas of its business after hedge fund Third Point invested $3.5 billion in the company in June.

When completed, the deal will be the first major Nestlé divestment since Mark Schneider took over as CEO. He said the company aims to focus high-growth categories like coffee, infant nutrition, pet care and bottled water. Between them, they account for more than half of group sales and are growing almost 2% faster than Nestlé’s other categories.

Towards the end of last year it bought vitamin producer Atrium Innovations for $2.3 billion and US coffee brand Chameleon Cold-Brew.

Source: Foodbev