Nestle USA gets out of candy business, sells American holdings


Nestle Crunch bars | AFP

Swiss food and beverage company Nestle is selling its USA candy business to Italian confectioner group Ferrero for $2.8 billion in cash, Ferrero announced on Tuesday.

After a review of its portfolio last summer, Nestle hinted that it might sell its US business, with its eye on higher-growth areas like pet care, coffee and infant nutrition.

Nestle is the world's largest food and beverage company, with more than 2,000 brands - including baby foods, bottled water, cereal, coffee, frozen food, dairy, drinks and pet care.

The acquisition of Nestlé will make Ferrero the third-largest USA confectionery business behind Hershey and Mars.

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Encompassing over 20 brands like Butterfinger, Nerds, and LaffyTaffy, Nestle's confectionery business in the USA generated about $900 million in sales in 2016.

The transaction covers Nestle's candy brands only and does not include Nestle's iconic Toll House baking products, a strategic growth brand which the company will continue to develop.

The deal will move Ferrero into third place in terms of US chocolate market share, at about 11 percent.

Ferrero will acquire Nestle's USA manufacturing facilities in IL.

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The company said it remains committed to its global chocolate business, including its KitKat brand.

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

Nestle was formed in 1905 with the merger of the Anglo-Swiss Milk Company, established in 1866 by brothers George and Charles Page, and Farine Lactee Henri Nestle, founded in 1866 by Henri Nestle.

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