Ferrero, the Italy-based food group behind Kinder chocolate, is reportedly weighing up a move for Nestle’s confectionery business in the US, which the world’s largest food maker may be ready to sell.
US-based mergers and acquisitions publication DealReporter has said Ferrero is eyeing the assets, which are under review by Nestle.
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When approached by just-food, Ferrero refused to be drawn on the report. “The Ferrero Group does not comment on speculation,” the company said.
On Friday, Reuters reported US confectionery supplier Ferrara Candy Company is also preparing itself for any auction for the unit, which includes brands like Butterfinger and Raisinets.
In June, Nestle said it was exploring strategic options for the business, including a possible sale. The Swiss food giant has come under increasing pressure to improve its margins and raise returns to shareholders. Later in June, activist investor Third Point acquired a stake in Nestle and turned up the pressure on the group’s management to shake up its strategy to improve its performance.
With annual sales of around CHF900m (US$923m), the valuation of Nestle’s US confectionery unit is believed to stand at between US$1.5bn and $2bn. Nestle is the fourth-largest confectionery group in the US, with around a 3.3% share of the total market.
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By GlobalDataIn March, Ferrero bought US chocolate maker Fannie May Confections Brands in a deal worth around US$115m.
Ferrara was created by the 2012 merger of Farley’s & Sathers and Ferrara Pan Candy Co. Farley’s & Sathers’ owner, the private-equity firm Catterton Partners, retained a majority stake in the confectioner.
In 2016, it was believed that Conyers Park Acquisition, a listed affiliate of Centerview Capital headed by former Hershey CEO David West, was closing in on a deal to acquire Ferrera. However, reports suggested that an agreement could not be reached on Ferrara’s valuation.
Ferrara could not be reached for immediate comment.
