Nestlé S.A. will sell its U.S. confectionery business to Ferrero Group for $2.91 billion (CHF 2.8 billion), the company announced Tuesday.

 

The all-cash transaction — the subject of much speculation over the last few weeks — will close in late March, pending closing conditions and regulatory approvals.

 

Nestlé said in June it was “exploring strategic options” for its U.S. confectionery division, which pulled in $935 million (CHF 900 million) in 2016. That represents about 3 percent of Nestlé’s $26.7-billion U.S. business.

 

The transaction covers chocolate brands including Butterfinger, Baby Ruth, 100 Grand, SkinnyCow, Raisinets, Chunky, OhHenry! and SnoCaps, as well as sugar brands such as SweeTarts, LaffyTaffy, Nerds, FunDip, PixyStix, Gobstopper, BottleCaps, Spree and Runts. It does not include Toll House baking products, a brand which the company says it will continue to develop. Nestlé will also retain and work to grow its global brand KitKat.

 

Nestlé CEO Mark Schneider said divesting its U.S. confectionery brands will allow it to focus on categories where the company can grow its already significant footprint, particularly pet care, bottled water, coffee, frozen meals and infant nutrition.

 

"With Ferrero we have found an exceptional home for our U.S. confectionery business where it will thrive,” he said. “At the same time, this move allows Nestlé to invest and innovate across a range of categories."

 

While Nestlé is looking to move away from the U.S. confectionery arena in the face of changing consumer tastes, Ferrero Group has been aggressive in strengthening its position in the market. The Italian company acquired Fannie May and Harry London brands in May and Ferrara Candy Co. in December. 

 

With this transaction, Ferrero, maker of Tic Tac, Nutella and Ferrero Rocher, will become the third-largest confectionery company in the U.S. market. It will acquire Nestlé’s three Illinois manufacturing facilities, located in Bloomington, Franklin Park and Itasca. The company will also continue to operate from offices in Glendale, Calif., and other locations in Illinois and in New Jersey.

 

“We are very excited about the acquisition of Nestlé’s U.S. confectionery business, which has an outstanding portfolio of iconic brands with rich histories and tremendous awareness,” said Giovanni Ferrero, Ferrero Group executive chairman. “In combination with Ferrero’s existing U.S. presence, including the recently acquired Fannie May Confections Brands and the Ferrara Candy Co., we will have substantially greater scale, a broader offering of high-quality products to customers across the chocolate snack, sugar confectionery and seasonal categories, and exciting new growth opportunities in the world’s largest confectionery market.”