Nestle SA (NESN.S) is reported to have entered agreement to sell one of its U.S. ice cream most profitable business to Froneri in a deal worth at $4 billion, moving control of brands including Häagen-Dazs to a joint venture the Swiss group set up in 2016.
Froneri’s establishment came after Nestle merged its European ice cream business in about Twenty countries globally with R&R, a unit of French private equity firm PAI Partners.
It’s considered one of the most successful ice cream company with companies scattered around Latin America, Asia ETC. It is undoubtedly one of the biggest and well known brand of ice cream company in the world with a turnover of around 2.9 billion Swiss francs ($2.91 billion) as of last year.
The recent Wednesday’s agreement see the company expanding to reach to the United States and is projected to add $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 Chief Executive Officer Mark Schneider said.
According to reports, Nestle owns the rights to Häagen-Dazs in the United States, while Yoplait maker General Mills (GIS.N) sells the premium brand in non-U.S. markets.
Ever since taking over reins at Nestle in 2016, Schneider has engaged in business initiatives that aims at selling premium products in high growth categories including food for babies and coffee, in same wayy, off loading businesses that are not making enough profit.
First quarter of this year, the company 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.
This agreement, we are told could close in the 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.
