The Ferrero Group to acquire Nestle's United States confectionery unit for $2.8 billion

Nestle Butterfinger and Crunch candy bars

Nestle is selling its USA confectionery business to Italian chocolate and candy maker Ferrero for an estimated $2.9 billion, the company announced Tuesday.

Nestle US candy business registered sales of some 900 million Swiss francs in 2016, in a market worth an overall US$8 billion, according to Ibis World.

Ferrero is best known for its Ferrero Rocher chocolates, but the company also owns favorites Nutella and Tic Tacs.

The U.S. unit, home to local, mass-market names BabyRuth, Butterfinger and Crunch, has been underperforming rivals for years, suffering from consumers' preference for healthier snacks like fruit and nut bars and premium brands like Lindt.

The change of focus has prompted Nestle to bid for the vitamin and supplements business being sold by Germany's Merck after agreeing last month to buy vitamin maker Atrium Innovations.

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It is is expected to be completed around the end of the first quarter of 2018.

In September, Nestle announced that it bought a majority stake in Blue Bottle Coffee, a high-end coffee company. The transaction does not include Nestle's Toll House baking products. Category leaders included The Hershey Co.

Hershey was reportedly a bidder for Nestle's US candy business, but the company's pending acquisition of SkinnyPop parent Amplify Snack Brands for $1.6 billion suggests the company is moving in another strategic direction.

The sale will see Ferrero become the third-largest confectionary company in the United States market. The Alba, Italy-based company will also acquire Nestle's USA manufacturing facilities in Bloomington, Franklin Park and Itasca, Illinois.

The Ferrero Group will pay US$2.8bn (€2.28bn) in cash. "We look forward to welcoming the talented team from Nestle to Ferrero and to continuing to invest in and grow all of our products and brands in this key strategic and attractive market".

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