Industry Speculation over Ferrero’s Future

17 Feb 2015 --- Speculation continues over the future of the Ferrero empire following this month’s death of the company’s patriarch, Michele Ferrero, aged 89. The Italian company, which is worth more than $25bn, has historically shied away from any acquisitions, mergers or other financial deals but insiders believe the family’s next generation may consider a change to this strategy.

The maker of Nutella spread, Kinder Eggs and Ferrero Rocher chocolates would be an attractive acquisition for a host of international food companies, most notably rivals such as Nestle, Mondelez International, Mars or Hershey.

Sources familiar with the company say Ferrero once considered making a bid for Cadbury but this evaporated when the plan was rejected by Michele Ferrero. 

Currently the company is headed up by son Giovanni Ferrero, who has held sole leadership since 2011, after the sudden death of his older brother Pietro. Giovanni would need to hold the majority share to give him the power to make any dramatic changes to the business and at present the details of Michele’s will and share distribution has not been made public. 

Analysts estimate that Ferrero could command between 16bn and 20bn Euros, based on annual sales of 8bn Euros, if it went up for sale. 

But just two years ago Giovanni was quoted, after bid rumors, as saying: “We are a family business and we intend to remain that way”.

Other industry insiders believe that with such a history of keeping things in the family, a public listing might be more likely as it would allow the family to diversify their wealth while keeping control. 

Most people familiar with the business don’t expect a change in the current strategy to be revealed any time soon. 

The company began in Alba in 1946, when Michele’s parents changed a pastry shop into a factory for processing a cocoa and hazelnut paste. The company has grown in size through organic growth through its brands and extending into new markets, rather than via acquisitions. 

It now has 30,000 employees across more than 20 countries and it holds around 8% of the international chocolate market, making it the fourth largest confectionery brand in the world (after Mondelez, Mars and Nestle). Its Kinder brand is the world’s third-biggest by revenues after Wrigley and Cadbury.