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.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last