Nestle to sell US Confectionery business to Italy's Ferrero for $2.8 bn

Global food giant Nestle SA yesterday struck a deal to sell its confectionery business in the US to Italy's Ferrero for $2.8 billion in cash.

The deal includes Nestle's popular 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 deal does not include its iconic Toll House baking products, a strategic growth brand which the company will continue to develop.

Nestlé said that it remains fully committed to growing its leading international confectionery activities around the world, particularly its global brand KitKat.

Nestlé's US confectionery sales in 2016 reached about $900 million, which represents about three per cent of the entire company group sales in the US.

The sale is part of a larger shake-up by Nestle's new CEO Mark Schneider, who has focused on acquisitions for growth and sell weak brands.

This year alone, he has made six acquisitions which include Chameleon Cold Brew, Freshly Inc, Sweet Earth Inc, Terra Canis GmbH, Blue Bottle Coffee Inc and others.

Commenting on the sale, Schneider said, ''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.''

Ferrero, which makes Nutella spread, Tic Tac and Ferrero Rocher, will become the third biggest confectionery maker in the US post closing of this deal.

Ferrero said that the acquisition would give it "substantially greater scale" and "a broader offering of high-quality products" for US customers.

Closely held Ferrero has recently been targeting the US market. Last year it acquired Ferrara Candy Co, maker of Red Hots and Lemonhead candies, and confectioner Fannie May.

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