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Nestle sells part of confectionery business to Ferrero for US$2.8 billion

Nestle sells part of confectionery business to Ferrero for US$2.8 billion

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

The acquisition of Nestlé will make Ferrero the third-largest US confectionery business behind Hershey and Mars.

Ferrero will acquire more than 20 American brands with a rich heritage and strong awareness, including iconic chocolate brands such as Butterfinger, BabyRuth, 100Grand, Raisinets, Wonka and the exclusive right to the Crunch brand for confectionary and certain categories in the USA, as well as sugar brands such as Sweet Tarts, LaffyTaffy, and Nerds.

The Italian confectioner already makes and sells popular products including, Tic Tacs, Nutella spread and Ferrero Rocher. The Alba, Italy-based company will also acquire Nestle's US manufacturing facilities in Bloomington, Franklin Park and Itasca, Illinois.

Thanks to the deal, Ferrero is set to becoming the third-largest confectionery company in the United States, according to Euromonitor.

The market lately has been tough for Nestle and Schneider has been working on growth strategy.




Nestle sold Butterfinger and its other USA confectionery brands to Ferrero. Last year, it acquired Ferrara Candy Co., the maker of Red Hots, Lemonhead and Brach's sweets, as well as confectioner Fannie May.

Overall, the company's USA sales were around $27 billion in 2016. Mars, the maker of Snickers and M&Ms, acquired a minority stake investment in Kind.

Ferrero, which bought Thorntons in 2015, will get 20 American brands, including Baby Ruth and Wonka.

Once the deal closes, Ferrero could consider developing new product varieties based on existing brands, similar to what Mondelez has done with Oreo or Hostess Brands with Twinkies.

The Ferrero Group posted a consolidated turnover of 10.3 billion euros (12.5 billion US dollars) in 2016, with an 8.2 percent increase over the previous year.

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