Ferrero to take on brand portfolio including Butterfinger

Ferrero to take on brand portfolio including Butterfinger

Ferrero has clinched a deal to buy Nestle's confectionery business in the US.

The privately-owned Ferrero, which has made two notable acquisitions in the US in the last ten months, is to pay CHF2.8bn (US$2.91bn) in cash for the Nestle division, which includes brands such as Butterfinger and Raisinets.

In October, Italy-based Ferrero announced it was to acquire US firm Ferrara Candy Co., the third-largest, non-chocolate confectionery company in the US, with candy brands including Trolli, Lemonheads, Red Hots and Brach's. In March, Ferrero snapped up US chocolate maker Fannie May Confections Brands.

Ferrero said the acquisition of Nestle's assets, expected to be finalised towards the end of this quarter, would make it the third-largest confectionery company in the US. Nestle said the business generated sales of "about CHF900m" in 2016.

Giovanni Ferrero, the Italy-based group's executive chairman, said: "In combination with Ferrero's existing US presence, including the recently-acquired Fannie May Confections Brands and the Ferrara Candy Company, we will have substantially greater scale, a broader offering of high-quality products to customers across the chocolate snack, sugar confectionery and seasonal categories, and exciting new growth opportunities in the world's largest confectionery market."

The deal adds more than 20 brands to Ferrero's range in the US, which also includes its own products like Tic Tac mints and Ferrero Rocher pralines. It will also acquire Nestle's manufacturing facilities in Bloomington and Itasca, both in Illinois.

Nestle announced in June it was reviewing its options over the business. Speaking to analysts a month later, Nestle CEO Mark Schneider said the company had already received "significant" interest in the assets "both from strategic and financial buyers".

Reports in the US last week said Ferrero and Hershey had submitted final bids for the business, which also includes brands like Crunch, Baby Ruth and SnoCaps.

Schneider said today: "With Ferrero we have found an exceptional home for our US confectionery business where it will thrive. At the same time, this move allows Nestle 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."

Nestle said it "remains fully committed" to growing its international confectionery operations around the world, "particularly its global brand KitKat".