Ferrero nears deal for Nestle's U.S. candy operations

MILAN, Italy – Italy's Ferrero is closing in on a $2.8-billion deal for Nestle's US confectionary business, Bloomberg said Wednesday, January 10, amid signs a deal could be completed by Sunday, January 14.

Nestle USA registered sales of some 900 million Swiss francs (828 million euros/$900 million) in 2016, in a market worth an overall $8 billion, according to Ibis World – equivalent to around 1/5 of the global market.

The firms declined to comment on the deal.

Earlier reports had said Ferrero, above all known for its Tic Tac, Nutella and Ferrero Rocher brands but which has traditionally preferred organic growth to acquisitions, had been vying with Hershey and private investor groups including France's Rhone Capital for the deal.

Nestle owns brands including Crunch, Butterfinger, Baby Ruth and Skinny Cow.

The acquisition would see Ferrero, world number 3 in the candy sector after doubling turnover to 10 billion euros in the past 10 years, become the third-largest sweets producer in the United States behind Hershey and Mars.

Currently, its US business only accounts for around 5% of its business having bought Ferrara Candy in December.

Family-owned Ferrero, which opened its door in 1946, has 22 production sites and more than 40,000 employees and sells in more than 170 countries. Its Nutella chocolate spread has 32 million fans on Facebook.

In 2014 it bought Turkey's Oltan, then a year later Britain's Thorntons, before setting its sights on the US market.

With demand for sugary fare stagnating Nestle has been moving toward healthier foodstuffs, while holding on to its prepared-dishes, ice cream and global confectionery businesses, Bloomberg noted. –