Nestlé in Merger Talks with R&R Group
October 05 2015 - 10:00AM
Dow Jones News
Nestlé SA is in advanced talks with European ice-cream maker
R&R Group to form a joint venture for ice cream mainly in
Europe and Africa.
The world's largest packaged foods company said the proposed
merger with R&R, owned by French private-equity firm PAI
Partners, would help its ice cream business grow. It expects the
tie-up to be implemented next year and to be chaired by Luis
Cantarell, Nestlé 's executive vice president for Europe, the
Middle East and North Africa.
Switzerland-headquartered Nestlé will contribute its ice cream
businesses in Europe, Egypt, the Philippines, Brazil and Argentina
to the new joint venture and transfer its European frozen food
businesses, excluding the pizza operation.
Both companies would own an equal share of the new joint venture
which would operate in more than 20 countries and employ more than
10,000 people, said Nestlé .
Nestlé holds roughly 10.8% of the global ice cream market, while
R&R has 0.8% according to research firm Euromonitor. The new
joint venture would help Nestlé better compete with archrival
Unilever PLC, which has a 22.8% share of the global ice cream
market and which last week said it had agreed to buy Italian ice
cream maker Grom.
Both Nestlé and Unilever have been selling slow growing parts of
their food businesses, but ice cream is seen as a growth area, with
Euromonitor forecasting that the global market will rise to $107
billion by 2020, up from $71 billion currently.
Reuters, which first reported the news, put the value of the
deal at €3 billion ($3.4 billion) and said that if the venture went
through, PAI could sell its stake in R&R in a few years time,
and that Nestlé could list the combined business.
A spokesman for Nestlé declined to comment. PAI didn't
immediately respond to a request for comment.
R&R makes ice cream brands like Cadbury Flake Cones and
Rowntree's Fruit Pastille lollies a R&R currently licenses
Nestlé 's brands in the U.K., Ireland, Australia, New Zealand, and
South Africa. In March, Nestlé agreed to sell its South African ice
cream business to R&R. Nestlé owns brands like Extreme, Nestlé
Schö ller and Mö venpick.
Nestlé 's ice cream business in the U.S.—which includes brands
like Edy's and Dryer's—in Canada, Greater China, Thailand,
Malaysia, Peru and Chile won't be included in the joint venture.
Neither will its business in Israel, where it already has a joint
venture with Osem Investments.
Nestlé 's milk products and ice cream business reported
half-year sales of 7.19 billion Swiss francs, up 0.8% from a year
earlier on an organic basis, which strips out currency
movements.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 05, 2015 09:45 ET (13:45 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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