Nestle sells U.S. ice cream brands to Froneri

Zurich | Reuters — Nestle SA has agreed to sell its U.S. ice cream business to Froneri in a deal valued at US$4 billion, moving control of brands including Häagen-Dazs to a joint venture the Swiss group set up in 2016.

Froneri was created after Nestle merged its European ice cream business in 20 countries with R+R, a unit of French private equity firm PAI Partners.

With operations in regions including Latin America and Asia, it is one of the largest ice cream companies in the world with a turnover of around 2.9 billion Swiss francs (C$3.87 billion) as of last year.

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Wednesday’s deal expands Froneri’s reach to the United States and is expected to add US$1.8 billion to annual sales.

“(We) are convinced that Froneri’s successful business model can be extended to the U.S. market,” Nestle’s CEO Mark Schneider said.

Nestle owns the rights to Häagen-Dazs in the United States and sells the premium brand in Canada, while Yoplait maker General Mills sells it in other non-U.S. markets.

Since taking over reins at Nestle in 2016, Schneider has embarked on a strategy that focuses on selling premium products in high growth categories such as baby food and coffee, while offloading underperforming businesses.

Earlier this year, the Swiss company put its Herta cold cuts and meat-based products business on the block and sold its skin health business to a consortium led by EQT Partners for 10.2 billion Swiss francs.

“(The Froneri deal) underlines the seismic change going on at Nestle in terms of portfolio transformation to focus on where it thinks it can add value, while rolling those businesses where it thinks others can do better into ventures that do so,” Kepler Cheuvreux analyst Jon Cox said.

The deal is expected to close in the first quarter of 2020 following regulatory approvals, Nestle said.

The maker of Nescafe coffee and KitKat chocolates will continue to run its remaining ice cream businesses in Canada, Latin America and Asia.

Nestle’s ice cream brands in the Canadian market, along with Häagen-Dazs, include Real Dairy, Parlour, Drumstick, Goodnorth, Sundae and frozen desserts made with its candy brands such as Coffee Crisp, Smarties and KitKat.

Reporting for Reuters by Michael Shields in Zurich and Nivedita Balu and Siddharth Cavale in Bangalore. Includes files by Glacier FarmMedia Network staff.

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