Hershey’s and Ferrero emerge as front-runners for Nestlé’s US candy business

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08 Jan 2018 --- Confectionery giants Hershey and Ferrero are reportedly competing for Nestlé’s US candy business and have submitted final bids for the business that is said to be valued between US$2bn and US$2.5bn.

Nestlé’s US candy business has been up for sale since last year when the company began to explore “strategic options” as part of an on-going review, announced in June, examining future growth.

And now CNBC has reported how the Nestlé business is targeted by both companies, quoting sources familiar with the situation as saying that the company behind Nutella, The Ferrero Group, is emerging as the front-runner.

Potential bidders have been considering options since last autumn and Nestlé certainly has been drawing interest from a range of possible buyers. However, it looks likely that one of the big players will move in, but it may take another week or more for a decision to be made, reports CNBC, with their sources citing private equity firms as also expressing interest.

Just last month, Hershey’s signed an agreement to acquire Amplify Snack Brands, the company behind SkinnyPop popcorn, in a move which shows how big US food firms are diversifying focus to better cater for American consumers’ growing preference for healthier options.

The companies have entered into a definitive agreement under which Hershey will acquire all outstanding shares of Amplify for US$12.00 per share in cash and the deal, valued at approximately US$1.6 billion, will strengthen Hershey's position in the snacking aisle and broadens its portfolio of innovative savory snacking brands, according to the chocolate giant.

Global chocolate sales have been stagnating as consumers switch to healthier alternatives and Nestlé has been struggling to boost profits and market share.

With sales of around CHF 900 million (US$924million) in 2016, Nestlé's US confectionery primarily includes popular local chocolate brands such as Butterfinger, BabyRuth, 100Grand, SkinnyCow, Raisinets, Chunky, OhHenry! and SnoCaps, as well as local sugar brands such as SweeTarts, LaffyTaffy, Nerds, FunDip, PixyStix, Gobstopper, BottleCaps, Spree and Runts. It also comprises the international chocolate brand Crunch.

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