Nestle SA is selling its US ice cream business that includes brands such as Haagen-Dazs and Drumstick to a joint venture with private equity firm PAI Partners for US$4 billion.
The venture, Froneri, was created in 2016 when the Swiss company merged its European ice cream business with PAI-owned R&R.
It is now expanding to create a stronger challenger to Unilever, the global leader in ice cream with the Ben & Jerry’s and Magnum brands.
The move comes as Nestle chief executive officer Mark Schneider divests slower-growing businesses, such as its US confectionery operations, while focusing on pet food, water and coffee.
Nestle shares were little changed on Thursday in Zurich, Switzerland, trading.
“Nestle has been up against Unilever for years,” Bloomberg Intelligence analyst Duncan Fox said. “Having complete focus on ice cream makes it more likely for the merged brands to compete against Unilever’s global scale.”
Competition in the US ice cream market has intensified, as upstarts that offer healthier options, such as Halo Top, eat away at bigger players’ market share.
Unilever has responded with postmodern flavors such as Turmeric Chai & Cinnamon or Matcha & Fudge.
The US ice cream business being divested had sales of US$1.8 billion last year, while Froneri had revenue of 2.9 billion Swiss francs (US$2.95 billion), Nestle said.
The deal would give Froneri a 10 percent global market share, compared with Unilever’s 18 percent, Bloomberg Intelligence said, citing Euromonitor data.
“We see the move as a further step in a managed exit, with a potential eventual endgame of an outright sale of the JV assets to PAI,” Jefferies analyst Martin Deboo wrote in a note.
Schneider signaled an appetite for deals at Nestle’s financial update in October, after the US$10 billion sale of a dermatology unit earlier this year.
The company has said that it aims to complete a review of its ailing European processed-meat brand Herta by the end of the year, and is said to be considering a sale of its two ailing Chinese units, Hsu Fu Chi International Ltd (徐福記國際集團) and Yinlu Foods Group (銀鷺食品集團).
The ice cream deal also follows Nestle’s decision to cut about 4,000 jobs linked to the direct delivery system of frozen pizza and ice cream to stores, and instead transition to a warehouse model to lower costs.
Nestle is “convinced that Froneri’s successful business model can be extended to the US market,” Schneider said in a statement.
The venture is gaining market share, Nestle said.
The Swiss firm sells Haagen-Dazs in the US, while General Mills Inc makes it for Europe and other markets.
Froneri has leveraged 1.8 billion euros (US$2 billion) of outstanding loans in a mix of euros, British pounds and Australian dollars, Bloomberg data showed.
The company is rated “Ba3” by Moody’s Investors Service and “B+” by S&P Global Ratings.
It last tapped the loan market in June to fund the acquisition of New Zealand-based ice cream maker Tip Top, with Credit Suisse Group AG, Citibank and Goldman Sachs Group Inc arranging that deal.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors
RSS