Hershey eyes Nestle's US confectionery business as potential bidders line up

17 Oct 2017 --- Four months after Nestlé began to explore options for its US confectionery business, including a potential sale, the company is drawing interest from a range of possible buyers including Hershey’s, which is reportedly preparing a bid. According to US media reports, the chocolate giant is expected to compete against other companies and private equity firms and the first-round bids for the Nestlé business are due later this week. 

Michele Buck was recently appointed as the new Hershey CEO and she has already said the company is looking to cut costs and improve profit margins. In March, Hershey announced it was cutting around 15 percent of its global workforce in a jobs cull.

Sources have also told American news channel CNBC that Ferrara Candy, owned by private equity firm L Catterton, is also expected to put forward an introductory offer and how Nestlé is exploring options that the company could be worth as much as US$2.5 billion.

Nutella-owner Ferrero is also understood to be interested. 

During Nestlé’s June announcement it said how its US confectionery business had sales of around CHF900 million (US$921 million) in 2016. It 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.

The strategic review does not cover Nestlé’s iconic Toll House baking products, a strategic growth brand which the company will continue to develop in the US market.

At the time, a statement said: “Nestlé will continue to invest and grow in the US, where it has leadership positions across a large number of categories such as petcare, bottled water, frozen meals, infant food and ice cream. Nestlé will continue to innovate across these categories to meet rapidly-changing consumer demand.”