Ferrero, the Italian group from Alba (Cuneo), has put its hands on the world’s popular bars Kit Kat, Crunch and Butterfinger. Given that in 2016 Nestlé business was worth about 3 billion dollars, these new Ferrero’s possessions make the Italian group the third world confectionary producer, behind two outstanding American snacks giants: Mondelez International and Mars.
The acquisition of Nestlé USA by Ferrero was formalized on January 16th 2018 for a total amount of 2,8 billion dollars. Hershey’s was among the competitors of the Italian group for Nestlé, but it retired after the 1,6 billion dollars acquisition of another giant of the American market: SkynnyPop.
The acquisition of Nestlé USA allows Ferrero to widen its offer in the American market. While being already famous in the States with Nutella, Ferrero Rocher and Tic Tac, the Italian group also offers Ferrara candies (acquired in 2017) and Fannie May products through a business chain including 80 shops. After all, Ferrero’s experience in the USA is not a recent one: the group arrived in the States in 1969 with Tic Tac.
Thanks to the deal with Nestlé, Ferrero officially becomes the third chocolate producer in the US, gaining two positions (it was fifth before Nestlé US acquisition) over the previous ranking. The expansion in the American market could balance the sales of the group in Europe, where the company conducts two third of its business. In particular, Italy, France and Germany are countries where Ferrero is most active. Ferrero’s presence in the US could not only strengthen its presence overseas, but it could also work as a springboard for Asia, where the group has recently opened a centre for innovation in Singapore.
The most important points of the deal between Nestlé and Ferrero includes the need for Nestlé to fix up the balance and to improve the efficiency of its branches, also including Perugina in Italy. Furthermore, a team of experts will be constituted to assess the situation of the group in the US together with an investment bank.