Nestlé has agreed to sell its U.S. confectionery business to Ferrero for $2.8 billion in cash. The move comes after the company said it was exploring strategic options for the business. Nestlé’s 2016 U.S. confectionery sales reached about $900 million. The transaction is expected to close around the end of the first quarter of 2018 following the completion of customary approvals and closing conditions.
“With Ferrero we have found an exceptional home for our U.S. confectionery business where it will thrive,” says Nestlé CEO Mark Schneider. “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.”
Nestlé’s U.S. confectionery business represents about three percent of U.S. Nestlé Group sales. It includes chocolate brands such as Butterfinger, Crunch, BabyRuth, 100Grand, Raisinets, Chunky, OhHenry! and SnoCaps, as well as sugar brands such as SweeTarts, LaffyTaffy, Nerds, FunDip, PixyStix, Gobstopper, BottleCaps, Spree and Runts.
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 says it will continue to develop. Nestlé adds that it remains fully committed to growing its leading international confectionery activities around the world, particularly its global brand KitKat.
With sales of around $27 billion in 2016, the U.S. is Nestlé’s largest market. Its products can be found in 97 percent of U.S. households under brands such as Purina, Nestlé Pure Life, Coffee-Mate, Gerber and Stouffer’s. The company employs 50,000 people in more than 120 locations across the U.S., including 77 factories and 10 R&D centers.