Nestle selling USA candy business for $2.9 billion

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Italian confectionery giant Ferrero on Tuesday bought the USA candies business of Swiss-based multinational Nestlé for $2.8 billion in cash.

Nestle US candy business registered sales of some 900 million Swiss francs in 2016, in a market worth an overall US$8 billion, according to Ibis World.

Nestle's American sweet treats include Nestle Crunch, Butterfinger, Baby Ruth, Raisinets, Nips and Laffy Taffy.

The deal is expected to close at the end of the first quarter.

Though Nestle is hanging on to non-US confectionery operations, bankers and analysts have said it might wind down its interest further.

After a review of its portfolio last summer, Nestle hinted that it might sell its USA business, with its eye on higher-growth areas like pet care, coffee and infant nutrition. At the time of the announcement, the company said it remains fully committed to growing its worldwide confectionery activities around the world, particularly global brand KitKat.

Nestle's USA business, home to mass-market products BabyRuth, Butterfinger and Crunch, has been underperforming rivals for years as consumers have turned increasingly towards healthier snacks such as fruit bars and premium chocolate brands such as Lindt.

Nestle said it remains fully committed to growing its leading worldwide confectionery activities around the world, particularly its global brand KitKat.

In 2017, Nestle ranked fourth in USA confectionery market share with 4.6% of the market, according to data from Nielsen for the 52 weeks ended July 8, 2017. (44.6%), Mars Inc. (29.2%), and Lindt/Ghirardelli (4.6%). It will also get exclusive rights on the Crunch brand in the United States as well as on candy brands SweeTarts, LaffyTaffy and Nerds.

Ferrero is best known for its Ferrero Rocher chocolates, but the company also owns favorites Nutella and Tic Tacs.

Nestle said it only represented around three per cent of its overall USA sales.

"We will have substantially greater scale, a broader offering of high-quality products to customers across the chocolate snack, sugar confectionery and seasonal categories, and exciting new growth opportunities in the world's largest confectionery market", said Ferrero Group's executive chairman Giovanni Ferrero. "We look forward to welcoming the talented team from Nestle to Ferrero and to continuing to invest in and grow all of our products and brands in this key strategic and attractive market".



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