Daily Management Review

Nestle-R&R Ice Cream Merger Rumours Confirmed


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.

Science & Technology

Germany Introduces The First Ever Train To Run On 100% Hydrogen

Germany Plans On Cyber Security Research To End Reliance On U.S. Tech

Fuchsia will kill Android by 2023: Top 5 facts about the new OS

New Study Finds Goats Interact More With Happy People

More than 32 thousand "smart" houses under threat of hacker attack

Internet addiction and children: Global plague

Apple takes up to develop Apple Watch for health monitoring

Hyperloop is growing in Europe

Analysts: US gamers prefer mobile games

Google Assistant Winner Of Head-To-Head Test Of Digital Assistants, Beats Siri And Alexa

World Politics

World & Politics

Ex-Brexit Minister Said A ‘Reset’ Is Needed For Brexit Talks

10 countries with the best healthcare systems

Foreign Experts To Be Allowed By North Korea For Permanent Destruction Of Missile Sites

Ireland recovers €14.3 billion from Apple

Is China going to cancel its birth limit policy?

The US is ready to start negotiations with China

US and China start 5G race

Is Czech Republic posing a threat to the European Union?