Finnish dairy company Valio has announced that it has signed a letter of intent with the local unit of Swiss food group Nestlé in which Nestlé would acquire the Valiojäätelö ice cream business and the long-term rights to use the Valiojäätelö trademark.

The acquisition would also include the Turenki ice cream plant where Valio ice cream is produced. Valio said the parties are now commencing final negotiations to reach an agreement as soon as possible. The acquisition requires the approval of the Finnish Competition Authority.

Valio said it had decided to sell the business as part if its plan to focus on its core business.

“The ice cream markets are mainly an area of competition between two international corporations, so we believe that the future of Valiojäätelö ice cream is secure with Nestlé. Many European dairies have given up the production of ice cream because there is little synergy with other dairy products. We at Valio also wish to focus on our core business,” said Harry Salonaho, president and CEO of Valio.

“The possible acquisition of the Valiojäätelö business would make Nestlé one of the leading ice cream companies in Finland and an important ice cream operator in the Nordic markets. Furthermore, our current net turnover in Finland would almost double,” added Lars Finér, CEO of Nestlé Norden and chairman of the board of Nestlé Finland.

“We think that a presence in the Finnish market is important, because Finns consume 13.5 litres of ice cream per capita, the highest figure in Europe. Our intention is to make the Turenki plant a sizeable production and product development unit,” Finér said.

In 2003, net turnover of the Valio ice cream business stood at €63m (US$76.0m).