First off, I don’t have any insider info. This is purely a speculative piece. And really, who else but Nestlé really knows, and they probably haven’t decided on whom or whether either. But let’s consider the candidates: Hershey, Ferrero, Mondelez International, Mars, Perfetti Van Melle, Leaf Brands and perhaps even Tootsie Roll? And then there’s the recent comment made by Just Born’s Matt Pye about buying select brands.
Of course, let’s not forget private equity companies. After all, they have the money.
Speaking of which, Nestlé revealed that its U.S. division posted $924 million in sales last year. Various news agencies have said their sources have told them the bid would be between $2 to 2.5 billion. Some even said $3 billion.
Of course, last week Ferrero announced it would acquire Ferrara Candy Co. The proposed acquisition was recently cleared by the U.S. Trade Commission. News reports from the Wall St. Journal and Reuters estimate the deal to be worth $1.3 billion.
Ironically, Ferrara Candy Co. had also thrown its hat into the ring for Nestlé’s candy operations. The pending sale to Ferrero makes that rather a moot point, I’d say. Nonetheless, does Ferrero have the financial moxie to dig even deeper and establish itself as the No. 3 player in the United States with the acquisition of Nestlé’s brands? That certainly would set the stage for a battle of epic proportions in the U.S. confectionery sector.
Am I forgetting about Mondelez International? Not really. It’s just that lame-duck Chairman and CEO Irene Rosenthal indicated a few weeks ago that the company’s not that interested. And today, Mondelez announced that it has hired Glen Walter as executive v.p. and president, North America.
Walter comes from the Coca-Cola Co., where he was ceo for Coca-Cola Industries China. Prior to that, he was president and chief operating officer for Coca-Cola in North America.
In the company press release, Rosenfeld says “Glen is an inspirational leader with an impressive track record of building brands and driving growth in North America and beyond. His deep operating experience in complex businesses, including a strong focus on sales excellence, makes him a terrific leader for our North America region.”
Reading between the lines, that seems to confirm the company’s stance on driving growth internally versus spending $2 billion-plus on Nestlé’s brands. Nonetheless, the company did make an unsuccessful move for Hershey. Could this be a final parting gambit by Rosenfeld? Surely tempting, but methinks an increased debt load could prevent the company from pulling the trigger.
From my perspective, it would be in Hershey’s interest to make a strong bid for the Nestlé brands. They are already licensed to sell Kit Kat — talk about the worst trade since the Cubs gave Lou Brock to the Cardinals — and adding Crunch, Babe Ruth, Butterfingers, 100Grand, Skinny Cow, Raisinets, Chunky, Goober and others couldn’t hurt.
With 44.1 percent of the U.S. chocolate market, however, anti-trust concerns could figure prominently. Selling off certain brands could address that. But then there’s the money issue again. Can Michele Buck convince the Trust now is the time to act?
Leaf Brands a dark horse? Now that would be a shocker. Don’t see it. Tootsie Roll? Might make sense, but again, taking on such a big debt seems unlikely for them.
What about Perfetti Van Melle? My European colleagues say that’s a strong possibility. Sold in bits and pieces? Sorry, Just Born. I doubt it, especially when Nestlé has so many possible suitors.
Private equity? Only a few have a good track record with candy companies, not to mention one of such size. I’m guessing it will be Hershey, with Perfetti in it to the end. Still, it’s fun to speculate, although I’m sure that’s not the case if you work for Nestlé’s confectionery division.
It’s unsettling if you’re an employee in a company about to be sold. Been there, gone through that many times. Just hope for the best. Regardless, would love to hear your thoughts on this.
