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Nestle's Candy Business Eyed By Lemonheads Owner Ferrara


07/24/2017


Nestle's Candy Business Eyed By Lemonheads Owner Ferrara
Preparing to participate in the auction for Swiss food group Nestle SA's U.S. candy business is Ferrara Candy Co, the owner of candies such as Lemonheads and Now & Later chews, reported the media quoting people who are reportedly familiar with the matter.
 
Ferrara's array of gum and soft-candy offerings could by augmented with chocolate brands such as Butterfinger and Baby Ruth of the potential deal goes through.
 
The possible sale of its U.S. candy business, whose brands also include Nips, SweeTarts and Raisinets was put on the cards as Nestle said in June that it would explore strategic options and that plan would include that possible sale. The value of Nestle’s U.S. candy business was put at between $1.5 billion and $2 billion by analysts at Jefferies.
 
With the aim to shed underperforming businesses, Nestle, the world's largest packaged foods maker, has been acting and making strategic plans. Nestle is being pressed to boost returns as demand for its products weakens by U.S. activist shareholder Third Point LLC, which has a $3.5 billion stake in the company.
 
Average annual sales of 900 million Swiss francs ($923 million) have bene reported by the business for sale. According to Bernstein Research with its sale volume, just behind Hershey Co, Mars Inc and Lindt, the business is the No. 4 player in the U.S chocolate and candy industry market.
 
There were no comments available from Ferrara and its private equity owner, L Catterton. Nestle did not immediately respond to a request for comment.
 
Salvatore Ferrara started selling Italian pastries and sugar-coated candy almonds in 1908 and Oakbrook Terrace, Illinois-based Ferrara's origins date back to that year. After the death of the founder's son, Nello Ferrara, it was sold to private equity firm L Catterton in 2012.
 
Farley's & Sathers Candy company, owner of sugar-coated jelly brand Chuckles and other candies and another of the buyout firm's portfolio companies, was used to merge Ferrara with it under L Catterton's ownership.
 
Earlier this year, terminated the sale process after disagreements over price, even as the company had explored a sale that it hoped would value it at more than $1.3 billion.
 
As consumers shift their preferences to healthier items, the U.S. sweets industry has become more challenging. Still, chocolate to sugar candies are being increasingly preferred by many consumers who still eat sweets.
 
And as candy owners look for cost efficiencies and heft in negotiating retail placement and distribution, scale has also become increasingly important to the industry. For example, Lindt's 2014 acquisition of chocolate company Russell Stover Candies Inc for $1.7 billion was driven by a crave for scale.
 
(Soource:www.cnbc.com) 


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