Nestlé to Sell U.S. Confectionery Biz to Ferrero

Confirming last week's reports of an impending deal, Nestlé has agreed to sell its U.S. confectionery business to Ferrero for $2.8 billion in cash. The transaction is expected to close around the end of the first quarter of 2018, upon the completion of customary approvals and closing conditions.

The transaction will make Alba, Italy-based Ferrero the third-largest confectionery company in the U.S. market, where its best-known brands include Tic Tac breath mints, Ferrero Rocher pralines and Nutella hazelnut spreads.

“We are very excited about the acquisition of Nestlé’s U.S. confectionery business, which has an outstanding portfolio of iconic brands with rich histories and tremendous awareness,” said Ferrero Group Executive Chairman Giovanni Ferrero. “In combination with Ferrero’s existing U.S. presence, including the recently acquired Fannie May Confections Brands and the Ferrara Candy Co., 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. 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.”

“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,” added Ferrero Group CEO Lapo Civiletti.

“With Ferrero, we have found an exceptional home for our U.S. confectionery business where it will thrive,” said Mark Schneider, CEO of Vevey, Switzerland-based Nestlé. “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 company’s U.S. confectionery business accounts for about 3 percent of U.S. Nestlé Group sales. Offerings include such well-known brands as Butterfinger, Crunch, BabyRuth, 100Grand, Raisinets, Chunky, OhHenry!, SnoCaps, SweeTarts, LaffyTaffy, Nerds, FunDip, PixyStix, Gobstopper, BottleCaps, Spree and Runts.

The transaction covers U.S. confectionery brands only and excludes the iconic Toll House baking product line, a strategic growth brand that the company will continue to develop. Nestlé will continue to grow its leading international confectionery activities, especially the global KitKat brand.

Also under the deal, Ferrero will acquire Nestlé’s U.S. manufacturing facilities in Bloomington, Franklin Park and Itasca, Ill., and will continue to operate through Nestlé’s Glendale, Calif., offices, as well as from its other current locations in Illinois and in New Jersey.

The United States, where Nestlé employs 50,000 people in more than 120 locations, including 77 factories and 10 R&D centers, is Nestlé’s largest market. The company’s U.S. confectionery sales came to about $900 million in 2016.