NESTLE AND HAAGEN DAZS TO JOIN FORCES

WILLIAM SMYTH

NEW YORK -- Nestle USA and the Pillsbury Company announced an agreement to form a joint venture between Nestle's novelty ice cream business and Pillsbury's U.S. Haagen-Dazs frozen-dessert business, during a press conference held here.

The agreement will become official once the two companies receive government approval. (The deal is subject to the normal Federal Trade Commission review process.) The new venture will provide an opportunity for significant top-line growth by combining the Haagen-Dazs brand name with Nestle's worldwide frozen-dessert technology. The companies offer complementary product lines in two distinct segments of the ice cream category -- Haagen-Dazs in the superpremium arena and Nestle with its novelty line. "We will be combining the assets of both companies, and we will have access to strong brands and the research-and-development technology of both companies, which is very important to us," said Joe Weller, chief executive officer and chairman of Nestle USA. "This will generate more value for the consumer and all stakeholders than either of the businesses could generate individually."

The new company will temporarily be called Ice Cream Partners USA, with James Dintaman, CEO and president of Nestle's ice cream division, acting as CEO.

Paul Walsh, chairman and CEO of the Pillsbury Company, gave many reasons for the merger.

"Both Nestle and Haagen-Dazs operate two distinct categories that have complementary product lines," said Walsh. "Adding Nestle's first-class technological know-how and expertise to the Haagen-Dazs brand will create new growth opportunities for this joint venture. Haagen-Dazs also has a new direct-store-delivery system that Nestle will be able to access. The overall distribution that we can create is far stronger than either company could achieve on its own. So there are many compelling strategic rationales for this particular venture."

Nestle is the No. 2 company in the U.S. novelty ice cream category, with sales of $300 million, up 12% from the previous year. Meanwhile, Haagen-Dazs has nearly $300 million in sales and has established itself as the No. 1 brand worldwide in superpremium ice cream.

"We conclude that the United States is the strongest ice cream market, and there is no question that this is a highly fragmented industry -- nearly $11 billion dollars in retail sales," said Dintaman. "We will now be a stronger player, and [the joint venture] allows us to capture all of the trends in terms of impulse and indulgence."

Neither Haagen-Dazs shops nor the two companies' international operations will be affected by the deal. The companies will get an approximately equal split of the profits. Haagen-Dazs is a unit of the Pillsbury Company, a Minneapolis-based subsidiary of Diageo plc. Nestle USA, Glendale, Calif., is part of the Swiss-based Nestle S.A.