Nestlé sells US Confectionary business to Ferrero for $2.8 billion

In a move towards healthier products, Nestlé has agreed to sell its US confectionary business to Italy’s Ferrero for $2.8 billion in cash. The move comes after the company announced the sale of Australian chocolate bar, Violet Crumble, last week.

The move follows on the heels of Nestlé CEO Mark Schneider’s focus on increasing the company’s growth and remaining competitive. The Swiss-chocolate maker, which is still committed to its non-confectionary business in the US, has sold off Baby Ruth, Butterfinger and Crunch, all of which have been underperforming.

The sale covers popular local chocolate brands such as Butterfinger, Crunch, BabyRuth, 100Grand, Raisinets, Chunky, OhHenry! and SnoCaps, and local sugar brands such as SweeTarts, LaffyTaffy, Nerds, FunDip, PixyStix, Gobstopper, BottleCaps, Spree and Runts that account for only 3 percent of US Nestlé Group’s sales.

Nestlé’s Schneider said, “This move allows Nestlé to invest and innovate across a range of categories where we see strong future growth and hold leadership positions, such as pet care, bottled water, coffee, frozen meals and infant nutrition.”

Analysts predict Nestlé, which has its eye on the consumer health and wellness sector, may drop other weak brands or leave the candy business, but retain and form partnerships with companies, such as Hershey’s with whom they own Kit Kat in the US.

Ferrero, which beat Hershey Co.’s bid, is now the third largest chocolate company in the US. Ferrero has been making acquisitions to strengthen its position in the US market and acquired Ferrera Candy Co. in October 2017.