Nestlé to sell US ice cream business to Froneri for US$4bn

12 Dec 2019 --- Nestlé has reached agreement to sell its US ice cream business to Froneri, an ice cream-focused joint venture Nestlé created in 2016 with PAI Partners, for a transaction value of US$4 billion. In this move, the Swiss giant will be offloading notable ice cream brands such as Häagen-Dazs, Drumsticks, Edy’s and Dreyer’s. Froneri, which already has operations in Europe, Latin America, Africa and Asia-Pacific will now have a strong presence in the US, the largest ice cream market in the world, notes Nestlé.

“The creation of Froneri has been a phenomenal success. We are now making this business our global strategic partner in ice cream and are convinced that Froneri’s successful business model can be extended to the US market. With this transaction, we are taking a decisive step towards our goal of achieving global leadership in ice cream,” says Mark Schneider, Nestlé CEO.

In 2016, Nestlé and PAI Partners merged Nestlé’s European ice cream business in 20 countries and PAI-owned R&R Ice Cream to create Froneri, one of the world’s largest ice cream companies. Froneri reached turnover of around CHF 2.9 billion (US$3 billion) in 2018.

Last year, turnover of Nestlé USA’s ice cream business was US$1.8 billion. With brands like Häagen-Dazs, Drumstick and Outshine, the business commands leadership in premium ice cream categories.

“This is another milestone acquisition for Froneri. The acquisition is testament to the strength and longevity of our relationship with Nestlé. This partnership and the continued support of PAI Partners will be essential to ensuring we continue to delight consumers with innovative, high quality products in all markets,” says Ibrahim Najafi, CEO of Froneri.

The transaction is expected to close in the first quarter of 2020, following the completion of customary regulatory approvals. Nestlé will continue to manage its remaining ice cream businesses in Canada, Latin America and Asia as part of its current market structure.

Froneri business highlights
In July, Froneri announced plans to acquire the Israel-based Noga Ice Creams Limited Partnership – part of the Nestlé-owned Osem Group in July. The move marked Froneri’s first entry into the Israeli market. This milestone deal sought to consolidate all of the Nestlé Europe, Middle East & North Africa ice cream businesses within the Froneri group.

In May, Froneri acquired Tip Top, global dairy co-operative Fonterra’s iconic New Zealand ice cream business. Fonterra confirmed the sale of Tip Top to Froneri for NZ$380 million (US$250.3 million), as it looked to trim its portfolio and focus on international markets. The Tip Top brand is over 80-years old and was incorporated into Fonterra in 2001, as part of its purchase of Peter and Browne’s Foods Business. The sale represents a gain of about NZ$100 million (US$66.7 million) above book value, which would have a positive six cents-per-share impact on earnings, Fonterra revealed in a statement.

In March, Froneri pegged indulgence and premiumization as key trends in the ice cream sector. The global player continues to eye opportunities within the space, launching in March a premium ice cream stick for UK and European markets called Nuii, which their company says “offers a new experience, which we expect our European consumers to love,” made with superior and exotic ingredients.

By Benjamin Ferrer