Nestlé has agreed to sell its US confectionery business, made up of more than 20 brands, to Italian confectionery giant Ferrero for $2.8bn.
The confectionery business of Nestle in the US makes up about 3% of US Nestle Group sales.
In 2016, the US confectionery business earned around $900m for the group.
Some of the well-known chocolate brands of Nestle in the US include Butterfinger, Crunch, BabyRuth, 100Grand, Raisinets, SnoCaps and Chunky to go along with sugar brands like SweeTarts, LaffyTaffy, Nerds, Gobstopper and BottleCaps.
Nestlé CEO Mark Schneider 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 transaction will not include Nestlé’s Toll House baking products, which the company will continue to develop. Nestle said that it will stay committed to expanding its confectionery activities outside the US, especially with its global chocolate bar brand KitKat.
For Ferrero, the acquisition is expected to help it become the third largest confectionary company in the US market. Ferrero’s brands in the US include Tic Tac, Ferrero Roche, Nutella, the Fannie May and Ferrara Candy.
As part of the deal, Ferrero will also acquire Nestlé’s US manufacturing facilities in Bloomington, Franklin Park and Itasca, all located in Illinois. It will also retain employees working for Nestle’s confectionary business.
Ferrero Group executive chairman Giovanni Ferrero 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.”
The transaction is anticipated to be completed around the end of the first quarter, subject to customary approvals and closing conditions.