Nestle candy divest draws CVC, Onex ahead of refresh bids, sources say

Provided exclusively by Mergermarket, an Acuris Company

Nestle [VTX:NESN] has asked prospective buyers of its US confectionery business to put up refresh bids on 13 November, according to three sources briefed on the matter.

The company is in the midst of management presentations with potential suitors, said two of the sources.

CVC Capital Partners and Onex are among the financial sponsors still pursuing the asset, said the first and second sources. Strategics that remain in pursuit include Hershey [NYSE:HSY] and Italy’s Ferrero, said the same sources.

Mondelez International [NASDAQ:MDLZ] attended a management presentation for the Nestle divestiture, said the first source. It is unclear whether the Illinois-based snack company is still involved in the process.

Initial bids for the confectionery business, which drew more than a dozen sponsors, were due the week of 9 October, this news service reported.

To make it into the second round of the auction, prospective suitors were asked to submit offers at 10.5x to 11x the unit’s close to USD 200m EBITDA, said the second and third sources. Each of the sources said they did not expect the divestiture to be valued at much higher than USD 2.5bn.

Goldman Sachs is advising the Swiss food and beverage company on the sale.

Last month, Ferrero announced an agreement to buy Ferrara Candy from L Catterton at unspecified terms. The deal is projected to close in 4Q17. Ferrero subsequently announced the acquisition of Fannie May Confections Brands from [NASDAQ:FLWS].

Ferrero would see strong US synergies from a combination of Ferrera Candy and the Nestle business, said the third source. Onex also participated in the Ferrara Candy sale process, noted one of the sources.

In July, Reuters reported that Ferrara was preparing to participate in the auction for Nestle’s US candy business which includes such well-known brands as Crunch, Butterfinger and Baby Ruth.

Mondelez and Mars, another logical suitor for the Nestle business, could face antitrust resistance, said the second source. According to the source, Hershey is less likely to trigger significant antitrust concern.

Another of the sources noted that Hershey has recently been more oriented toward healthier snacks.

Nestle’s confectionery unit in the Americas, which also includes Canada, Latin America and the Caribbean, saw revenue dip from the period beginning 2015 through 2016 from CHF 3.45bn to CHF 3.34bn, with the company noting that “the performance of confectionery in the US was disappointing, impacted by the competitive environment and low growth in the mainstream chocolate market.”

Nestle, Hershey, CVC and Mondelez declined to comment. Mars, Ferrero and ONEX did not return calls for comment.

by Marlene Givant Star, Bhavna Kaul and Anthony Valentino 

As seen in the Mergermarket, an Acuris company, newsletter on 03/11/2017




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