Nestlé Sells US Ice Cream Brands To Froneri For $4 Billion

Swiss group Nestle has decided to sell its U.S. ice cream business to joint venture Froneri in a $4 billion deal.

Under the deal, Nestle will move control of its ice cream brands including premium Häagen-Dazs to the joint venture. In addition to Häagen-Dazs, Nestlé's ice cream brands also include Outshine, Skinny Cow, Edy’s and Drumstick.

Nestle said the deal’s closure is expected in the first quarter of 2020 after regulatory approvals.

However, the maker of Nescafe coffee and KitKat chocolates will continue to run its ice cream businesses in Canada, Latin America, and Asia.

Froneri emerging as top ice cream company

The latest deal expands Froneri’s reach to the United States and adds approximately $1.8 billion to the annual sales.

The global footprint of Froneri has been expanding after the recent acquisitions of TipTop in New Zealand and Nestlé’s ice cream business in Israel.

Froneri was formed after Nestle’s merger of its European ice cream business with R&R, part of French private equity firm PAI Partners.

Nestle’s CEO Mark Schneider said: “We are convinced that Froneri’s successful business model can be extended to the U.S. market.”

The statement by Nestle CEO also noted that thanks to brands like Häagen-Dazs, Drumstick and Outshine, the business has attained “leadership in key ice cream categories, notably super premium.”

Mark Schneider added the deal will be a decisive step towards “achieving global leadership in ice cream.”

Froneri clocked a turnover of around 2.9 billion Swiss francs ($2.91 billion) in 2018. Its operations are spread in many regions of Latin America, Asia, and Africa, per USA Today report.

Nestle has been controlling the rights of the Häagen-Dazs in the United States, while General Mills sold it in non-U.S. markets.

According to Froneri CEO Ibrahim Najafi, the deal is a milestone acquisition in the drive “towards becoming the world’s best ice cream company.”

Reports had said Nestlé was closing many jobs at its Fort Wayne ice cream distribution center in Indiana and wanted to lay off 172 workers at the frozen distribution center in Indianapolis.

However, Nestlé said in December that it will invest $200 million at its Anderson production facility, per the report of Associated Press.

Reflection of Schneider’s strategy

“The Froneri deal underlines the seismic change at Nestle in terms of portfolio transformation,” Reuters quoted Kepler Cheuvreux an analyst with Jon Cox.

Nestle was taken over by Schneider in 2016 and the focus has been moving to premium products including baby food and coffee. Nestle has already sold its skin health business to a group under EQT Partners.