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Nestle Sells US Confectionery Business for $2.8B

Nestle Sells US Confectionery Business for $2.8B

Ferrero, which has over $12bn in global sales, will gain more than 20 American familiar brands and includes chocolate brands such as Butterfinger, BabyRuth, 100Grand and Raisinets along with candies Nerds and SweeTarts.

Nestle said last July that it was wrapping up a review of strategic options for the US candy business and that an exit was possible.

The global confectionary group Ferrero is acquiring Nestle's confectionary business for $2.8 billion.

Nestle is the world's largest food and beverage company, with more than 2,000 brands - including baby foods, bottled water, cereal, coffee, frozen food, dairy, drinks and pet care.

The company's Toll House line of baking products will not be affected by the acquisition.

The transaction is expected to close around the end of the first quarter of 2018.

Ferrero is building its US presence at the same time that the big companies are diversifying beyond the sweets that made them famous. In early 2017, the company said that candy sales in 2016 were disappointing, and global pricing pressure had forced it to cut costs.

The U.S. chocolate industry is in tumult.

According to Nestle CEO Mark Schneider, the move allows Nestle to invest and innovate across a range of categories where it see "strong future growth and hold leadership positions".

The sale will make Ferrero the third-largest confectionary company in the USA market.According to media reports, Ferrero competed with major chocolate manufacturer Hershey and private funds, including Rhone Capital, to secure the deal.

Ferrero, a family-owned chocolate company based in Italy, had not been very active in the M&A space until it acquired Fannie May and Ferrara, the maker of Now and Later, Brach's and Red Hots, last year. It will also get its hands on the exclusive right to the Crunch brand in the US. The business represents about 3 percent of the Swiss company's US sales.

Founded as a family business in Italy in 1946, Ferrero entered the United Kingdom market in 1966 and acquired Thorntons in 2015. It has been making Nutella since 1964.

It now operates through 22 plants in some 55 countries with 32,990 employees overall, selling its products in more than 170 countries, according to the company presentation.


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