Nestlé Is Selling Its US Candy Brands To The Maker Of Nutella

Ferrero and Nestle confectionery

Nestle is selling almost $3 billion worth of its US candy brands, including Butterfinger, BabyRuth and Nerds, to Ferrero, the maker of Nutella, according to the companies.

The sale of the unit, which includes the Butterfinger and Baby Ruth brands, is also the first major divestment by the Swiss food giant since Chief Executive Officer Mark Schneider took the helm previous year.

Nestle has snapped up companies that make vegetarian meals, vitamins and luxury coffee.

Encompassing over 20 brands like Butterfinger, Nerds, and LaffyTaffy, Nestle's confectionery business in the US generated about $900 million in sales in 2016. Nestle said in a statement announcing the sale that it remains "fully committed" to its chocolate business around the world. Ferrara is the third-largest, non-chocolate candy company in the United States, created by the merger of Ferrara Pan Candy Co. and Farley's & Sathers Candy Co.in 2012.

The U.S. chocolate industry is in tumult.

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Hershey has the license for KitKat in the U.S. But Nestle still owns the brand and it's not part of the Ferrero deal.

The sale to Ferrero, which does not include the Toll House brand of baking products, is expected to close around the end of the first quarter, Nestle said.

After a review of its portfolio last summer, Nestle hinted that it might sell its USA business, with its eye on higher-growth areas like pet care, coffee and infant nutrition.

In June 2017, Nestle had announced that it was exploring strategic options, including a possible sale, for its US chocolate and candy business, as the company focusing on its shift to becoming a health and nutrition company. Bloomberg notes, however, the company seems to be stepping away from candy. The business represents about 3 percent of the Swiss company's USA sales.

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