Grupo Herdez has agreed to hand over operational control of its Nestlé-licenced ice-cream business in Mexico to Froneri.
In a statement yesterday (13 April), the Mexico-based food group said the ice-cream operation will be integrated into a new partnership, with each company holding a 50% stake.
Herdez has operated the ice-cream business under an exclusive licence from Nestlé since 2015.
In a separate statement, Froneri, a joint venture between Nestlé and private-equity firm PAI Partners, confirmed the transaction.
As part of the agreement, Froneri will support the venture through a "capital contribution", which it said, is intended to “strengthen the financial structure of the business” and support its growth. The company will also have “full operational control”.
However, Froneri added the deal "does not represent a cash inflow for Grupo Herdez".
Froneri CEO Phil Griffin said: “The business operates under a portfolio of much-loved brands which we plan to invest in to further develop the business. We look forward to working with the Grupo Herdez team.”
After completion, Grupo Herdez will no longer consolidate the unit’s results in its financial statements and will instead recognise its share as “equity investments in associated companies”.
Héctor Hernández-Pons Torres, the chairman and CEO of Grupo Herdez, said: "This alliance marks the next step in the configuration of our portfolio, and we are proud to share the potential of this business with a global expert like Froneri. The focus of this alliance will remain on long-term value creation."
The deal comes after Nestlé unveiled plans in February to exit the remaining ice-cream business that does not sit within its Froneri joint venture.
Addressing analysts at that time, Nestlé CEO Philipp Navratil said that its remaining ice-cream business, though strong, is a “distraction”.
“This business is a great fit for Froneri and we have agreed to sell the business in a phased way,” Navratil added at the time.
As one of the world’s largest ice-cream companies, Froneri is present in more than 25 countries, with revenue of more than €5bn ($5.9bn).
Meanwhile, Grupo Herdez said the partnership will pair Froneri’s “global ice-cream expertise” with Herdez’s local market knowledge, to back a portfolio that includes Helados Nestlé, Häagen-Dazs, Mega and Carlos V.
Brand licencing in Mexico will be aligned with Froneri’s global framework with Nestlé.
The completion of the transaction is subject to clearance from Mexico’s National Antitrust Commission (CNA).
The companies expect the deal to be finalised later this year.
