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

Over 500 Genes Impacting Intelligence Identified By Scientists

MIT Scientists Say It Could Be Just 13 Years For Commercialization Of Nuclear Fusion

Apple patents MacBook with a keyboard screen

Vero: An Instagram killer?

Wacky Weather Causes ‘Split In The Polar Vortex’

Smart And Adaptive Artificial Eye Developed By Researchers At Harvard

NASA’s Mars Mission To Make Use Of Cold War-Era Atomic Rockets

Israel Completes Mars Habitat Simulation Experiment

Just $24 Earned By Hackers From The Huge Cryptojacking Campaign Conducted Last Week

New Molecule That Quickly Fights Cancer Cells Identified By Swedish Scientists

World Politics

World & Politics

Christine Lagarde: there’s no winner in trade wars

10 best countries for freelancers

Alarming Concerns Or Driving Force Towards Green Energy? – Bitcoin Growth Comes At Environmental Cost

Catalan authorities refuse to greet the King of Spain

Ten Top Politicians To Be Investigated By Greek Parliament On Charges Of Taking Bribes From Novartis

The cloudy future of Saudi Arabia

Australia To Welcome Britain On The Latter’s Interest In Joining TPP

South African President Zuma Finally Resigns, New President To Be Elected Soon