Nestle to Sell U.S. Candy Business for $2.8B

Nestlé said Tuesday that it had agreed sell its U.S. confectionery brands – including the Butterfinger, Baby Ruth, Crunch and SweeTarts brands – to the Italian confectioner Ferrero for $2.8 billion in cash.

Nestlé said the deal would help the Swiss company invest more in its pet care, bottled water, coffee and other food brands. It’s U.S. confectionary sales reached about $900 million in sales in fiscal 2016. Nestlé said it would retail its Toll House baking products line and the global Kit Kat brand.

“With Ferrero we have found an exceptional home for our U.S. confectionery business where it will thrive,” Nestlé CEO Mark Schneider said in a statement. “At the same time, this move allows Nestlé 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.”

Ferrero will acquire more than 20 brands such as Butterfinger, BabyRuth, 100Grand, Raisinets, Wonka and the exclusive right to the Crunch brand for confectionary and certain categories in the U.S., as well as sugar brands such as SweeTarts, LaffyTaffy and Nerds.

With this transaction, Ferrero would become the third-largest confectionary company in the U.S. market where it is best known for Tic Tac breath mints, Ferrero Rocher pralines, Nutella hazelnut spreads, the Fannie May and Harry London chocolate brands, and the Ferrara Candy Co., which was recently acquired by a Ferrero affiliated company and whose portfolio of brands includes Trolli, Brach’s and Black Forest Gummies.

Nestlé’s U.S. confectionery business represents about 3% of U.S. Nestlé Group sales.

Ferrero will acquire Nestlé’s U.S. manufacturing facilities in Bloomington, Franklin Park and Itasca, Ill., and the confectionary-related employees, and will continue to operate through offices in Glendale, Calif., as well as from its other current locations in Illinois and in New Jersey.

“We are very excited about the acquisition of Nestlé’s U.S. confectionary business, which has an outstanding portfolio of iconic brands with rich histories and tremendous awareness,” Giovanni Ferrero, executive chairman of the Ferrero Group, said. “In combination with Ferrero’s existing U.S. 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 confectionary and seasonal categories, and exciting new growth opportunities in the world’s largest confectionary market.”