Nestle Completes $4 Billion Sale of Ice Cream Business to Its Joint Venture Froneri

Nestle Completes $4 Billion Sale of Ice Cream Business to Its Joint Venture Froneri

Florence London

Nestle announced that it has decided to sell off its ice cream business in a deal worth $4 billion to Froneri. The control of the ice cream business will not pass on to a joint venture that Nestle had created back in 2016.

The joint venture had been created three years ago with R&R, which is one of the subsidiaries of the French private equity outfit PAI Partners. At that time, as many as 20 separate ice cream businesses in Europe had been merged.

Nestle’s ice cream business is one of the biggest and includes operations in Asia and South America, as well. As of 2018, it had generated a turnover of as much as $2.91 billion. The deal that Nestle struck yesterday with Froneri is a strategically important one for the latter, as well.

It would allow Froneri to get into the US and add sales figures to the tune of $1.8 billion on a yearly basis. This move seems to be part of the concerted effort from Nestle to move away from the business in which it believes others can shine.

Instead, it has decided to focus on other units, which can add more value to shareholders. An analyst at Kepler Cheuvreux said,

(The Froneri deal) underlines the seismic change going on at Nestle in terms of portfolio transformation to focus on where it thinks it can add value while rolling those businesses where it thinks others can do better into ventures that do so.

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