Nestlé SA, the US arm of the Swiss food behemoth, is to acquire 67% (55 million shares) of Oakland, California-based Dreyer’s Grand Ice Cream in a deal that will see Dreyer’s take over Nestlé’s US ice cream business.
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In addition, Dreyer’s shareholders will receive the right to sell their stock to the company for US$83 per share, from 1 January 2006, during certain periods until mid-May 2006. Outstanding Dreyer’s shares could also be called for redemption for US$88 from 1 January 2007, until 30 June 2007. Dreyer’s currently outstanding common stock will be exchanged on a share for share basis for new common stock that will carry these put and call features.
Dreyer’s shareholders must approve the deal and the transaction is subject to regulatory review.
Dreyer’s will continue as a publicly traded company, with Nestlé’s ownership remaining at no more than 67%. After the beginning of 2006, Nestle’s ownership of the remaining Dreyer’s stock could increase as a result of the exercise of the call or through exercise of the puts. It is also possible, after 2006, that Dreyer’s could continue operating as a public company.
T. Gary Rogers, chairman and CEO of Dreyer’s, said: “This alliance with Nestlé, including the addition of the Häagen-Dazs and Drumstick brands, enables us to retain our entrepreneurial culture and spirit, and continue our commitment to brand building, innovation, and direct store delivery.”
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By GlobalDataPeter Brabeck-Letmathe, CEO of Nestlé, added: “Our long-term investment in Dreyer’s speaks to the tremendous upside we see in the ice cream business in the US.”
As part of the agreement, Nestlé will increase its representation on the Dreyer’s board of directors from two to five members, and the board will expand from eight to ten members. Rogers will continue to serve as chairman and CEO, with Brabeck-Letmathe serving as vice chairman.
Dreyer’s will continue to manage its business with its current team of executives with the exception of president William F. Cronk, 59, who has announced he will retire at the close of the transaction. Cronk will remain actively involved in Dreyer’s as a director. Rogers, and Cronk, business partners for 30 years, bought Dreyer’s in 1977 and together built it into a US$1.5bn enterprise.
