Hershey, Ferrero frontrunners in Nestle candy divest, sources say

Provided exclusively by Mergermarket, an Acuris Company

Nestle’s [VTX:NESN] sale process for its US confectionery business appears to be a contest between two strategic bidders – Hershey [NYSE:HSY] and Italy’s Ferrero, said a source familiar and a source following the situation.

At least one financial sponsor may also remain in the Goldman Sachs-led process ahead of final round bids due on 15 December, the source familiar said. Strategics, however, likely have the upper hand in terms of the price given the potential synergies and the interest both strategics have in Nestle’s confectionary division, the two sources said.

This news service reported on 3 November that the company was set to collect refresh bids on 13 November. The report said CVC Capital Partners and Onex were among the financial sponsors still pursuing the asset alongside Pennsylvania-based Hershey and Ferrero.

Initial bids for the confectionery business, which drew more than a dozen sponsors and a few strategics, were due in October, this news service previously 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 of EBITDA, the previous report said, noting that the divestiture is unlikely to be valued much higher than USD 2.5bn.

In October, Ferrero announced an agreement to buy Ferrara Candy from L Catterton for unspecified terms. The deal was projected to close in 4Q17. Ferrero subsequently announced the acquisition of Fannie May Confections Brands from 1-800-Flowers.com [NASDAQ:FLWS].

Nestle said in June it would explore strategic options, including a possible sale, for its US candy business, whose brands also include Nips, SweeTarts and Raisinets.

Nestle and Ferrero did not respond to requests for comment. Hershey declined to comment.

by Bhavna Kaul and Marlene Givant Star

As seen in the Mergermarket, an Acuris company, newsletter on 29/11/2017


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