Daily Management Review

Nestle-R&R Ice Cream Merger Rumours Confirmed


10/05/2015




Nestle-R&R Ice Cream Merger Rumours Confirmed
As Nestle, the world's biggest packaged food firm focuses more closely on its higher-performing brands, it is on the way to merge its international ice cream business with R&R Ice Cream.
On Monday the company said that the merger talks were at an advanced stage.
 
There were earlier media reports that Nestle was in talks with R&R, maker of Cadbury Flake Cones, Rowntree's Fruit Pastille lollies and Kelly's Cornish ice cream, to form a 50/50 joint venture in a 3 billion euro ($3.4 billion) deal.
 
 
Nestle’s ice cream businesses in Europe, Egypt, the Philippines, Brazil and Argentina would be merged with R&R Ice Cream along with the European frozen food businesses, excluding pizza but including products like frozen cake brand Erlenbacher.
 
All of the UK based business of R&R is owned by French private equity firm PAI and t hat business too will go into the joint venture and would be be equally owned by both parties.
 
As consumers shift preferences toward healthy, fresh food or premium brands, the mass-market ice cream segment is under pressure. The global share of nestle has come down from 12.8 percent in 2010 to around 10.8 percent now. According to Euromonitor, Nestle now has less than half that of rival Unilever. R&R has a market share of 0.8 percent.
 
Nestle's ice cream business includes its own brand Nestle and Movenpick. The deal would not include Nestle’s ice cream operations in the United States.
 
R&R's manufacturing model and Nestle's distribution network would be combined in the new partnership. The new entity would employ more than 10,000 people and operate in over 20 countries.
 
The terms of the deal and its advisers were not disclosed but a source familiar with the matter said that Credit Suisse was advising Nestle, while PAI was being advised by Rothschild. The plan is for PAI to exit in a few years' time and for Nestle to list the business, the source added.
 
PAI has spent 850 million euros to buy R&R, Europe's largest private-label ice cream maker from Oaktree Capital Management in 2013. Private equity firms typically aim to own businesses for four to six years.
 
The joint venture will be chaired by Luis Cantarell, Nestle's executive vice president for EMEA and composed of senior executives from both companies.
 
"The structure is a way to see how the business develops and not to focus so much on it internally," said Jon Cox, analyst at Kepler Cheuvreux.
 
Changing tastes have increased competition and opened up the ice cream market to smaller players even as Nestle and rival Unilever together continue to control about a third of the $67 billion global ice cream market.
 
Gerber baby food, Nescafe coffee, KitKat bars and Purina pet food are some of the more coveted brand that Nestle owns in sprawling portfolio. The size and diversification of nestle has helped it weather the downturn better than some rivals even as recent economic weakness around the world has clipped its overall growth rate.
 
(Source.www.reuters.com) 







Science & Technology

Predicting A Patient’s Death Might Be Possible With Google’s Machine Learning Tool

Are online DNA databases dangerous?

Uber will identify drunk passengers

Experts found how automation will change markets

World's First Dedicated XR Platform Launched By Qualcomm

Hamburg becomes the first German city to ban old diesels

Hundreds Of Thousands Of Routers Have Been Hacked By Russians, Warns The FBI

Chinese Study Claims Heart Diseases Can Be Reduced By Having An Egg A Day

Asteroid mining: Reality or fiction?

3D Printing Used For Life Saving Kidney Transplant In Two Year Old At U.K. NHS

World Politics

World & Politics

USA launches the third round of the trade war with China

Italy says No to refugees

German experts: There’s no end to wars

G7 Picture Reveals Tensions Between U.S. And Its Close Allies

Pope Addresses The Oil & Gas Giants To ‘Respect’ COP21 Deal

G7 Does Not Welcome Russia: German Official

Trump-Kim Jong Un Meeting To Take Place, Confirms US President

US Official Claims Over 5,000 Tips Received On H-1B Visa Fraud