Sweet deal: Nestle sells United States candy to Ferrero for $2.8 bln

Sweet deal: Nestle sells United States candy to Ferrero for $2.8 bln

Nestlé has sold its United States confectionery business to Italy's Ferrero for $2.8bn in cash as the Swiss food giant shakes up its product portfolio.

The sale will make Ferrero the third-largest confectionary company in the US market.According to media reports, Ferrero competed with major chocolate manufacturer Hershey and private funds, including Rhone Capital, to secure the deal.

According to a report by Yahoo Finance, Ferrero is set to buy the iconic chocolate brands Butterfinger and Crunch bars, as well as the Nerds, SweeTarts and FunDip.

Its US candy business registered sales of about SF900 million in 2016, in a market worth an overall US$8 billion, according to research firm IBISWorld. The Alba, Italy-based company will also acquire Nestle's US manufacturing facilities in Bloomington, Franklin Park and Itasca, Illinois.

The deal of selling the Nestle's USA confectionery business doesn't include the company's global chocolate brand the Toll House baking line or KitKat.

Hershey did not win its latest bid to consolidate its leading position in the USA retail chocolate market, but that may not be a bad thing.

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"With Ferrero we have found an exceptional home for our USA confectionery business where it will thrive", said Nestlé CEO Mark Schneider.

For years, Ferrero was best known for it gold foil-wrapped Ferrero Rocher sweets and popular Nutella spread.

The deal would allow the Italian family-owned company "a broader offering of high-quality products to consumers of chocolate snacks, candies, confectionary and seasonal products", Ferrero Group executive chairman Giovanni Ferrero said in the statement. Marketing has reached out to Nestle for comment.

It follows Ferrero's purchase of Ferrara Candy, maker of Lemonheads and RedHots, from the L Catterton private equity group.

Ferrero, which bought Thorntons in 2015, will get 20 American brands, including Baby Ruth and Wonka.

The deal is expected to go through by March this year.

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