Nestlé SA on Jan. 16 announced it agrees to sell its U.S. confectionery business to Italy's Ferrero Group for $2.8 billion in cash. The candy brands have been on the market publicly since last June.
The sale relieves Nestlé of products that both don't fit its new philosophy of nutrition, health & wellness and have slipped from third to fourth place among U.S. candy brands. The candy business did generate $900 million in U.S. sales in 2016.
Adding in Ferrero's small organic penetration of the U.S. market and its late-2017 acquisition of Ferrara Candy Co., this Nestle purchase catapults the Italian confectioner into third place among American candy companies.
"Ferrero will acquire more than 20 American brands with a rich heritage and strong awareness," the acquiring company said in a release. Those brands include chocolate brands such as Butterfinger, BabyRuth, 100Grand, Raisinets, Wonka and the exclusive right to the Crunch brand for confectionary and certain other categories in the U.S., as well as sugar brands SweeTarts, LaffyTaffy and Nerds.
"With this transaction, Ferrero will become the third-largest confectionary company in the U.S. market where it is best known for Tic Tac breath mints, Ferrero Rocher pralines, Nutella hazelnut spreads, the Fannie May and Harry London chocolate brands, and the Ferrara Candy Co., which was recently acquired by a Ferrero affiliated company and whose portfolio of brands includes Trolli, Brach’s and Black Forest Gummies."
Ferrero also will get Nestlé’s U.S. manufacturing facilities in Bloomington, Franklin Park and Itasca, Ill., and will continue to operate through an office in Glendale, Calif. -- as well as from Ferrero's offices in Illinois and in New Jersey.
The transaction covers the U.S.-focused confectionery brands only and does not include Nestlé’s Toll House baking products, "a strategic growth brand which the company will continue to develop," the seller said. "Nestlé remains fully committed to growing its leading international confectionery activities around the world, particularly its global brand KitKat."
The transaction is expected to close around the end of the first quarter of 2018 following the completion of customary approvals and closing conditions.