Nestle is selling its U.S. candy business to Ferrero for about $2.8 billion

Zlati Meyer | USA TODAY

Show Caption Hide Caption Nestle sells U.S. confectionary business to Ferrero Italian chocolatier Ferrero has agreed to buy Nestle's U.S. confectionary business for $2.8bn. Video provided by Reuters

An earlier video attached to this story has been updated to better reflect additional details of the Nestle sale.

Nestle is selling its U.S. confectionery business to Italian chocolate and candy maker Ferrero for an estimated $2.8 billion, the company said Tuesday.

Nestle's American sweet treats include Nestle Crunch, Butterfinger, Baby Ruth, Raisinets, Nips, Skinny Cow and Laffy Taffy.

Nestle’s 2016 U.S. confectionery sales were about $900 million and represent about 3% of U.S. Nestle Group's sales, according to the Swiss company.

"This move allows Nestle to invest and innovate across a range of categories where we see strong future growth and hold leadership positions, such as pet care, bottled water, coffee, frozen meals and infant nutrition," CEO Mark Schneider said in a statement.

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Nestle is the world's largest food company, according to the 2017 Forbes Global 2000.

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

This acquisition will make Ferrero the third-largest chocolate confectionery in the world, according to London-based market research company Euromonitor International.

“We are very excited about the acquisition of Nestle’s U.S. confectionery business, which has an outstanding portfolio of iconic brands with rich histories and tremendous awareness," Giovanni Ferrero, executive chairman of the Ferrero Group, said in a statement.

Raphael Moreau, senior food and nutrition analyst at Euromonitor International, said this acquisition will help Ferrero achieve its strategic goal of boosting its presence in the US.

Ferrero bought Fannie May Confections Brands from 1-800-FLOWERS in May for $115 million and in October announced plans to buy Ferrara Candy Co. — best known for Brach's, Trolli and Lemonheads — from private equity firm L Catterton for an undisclosed amount.

The sale of Nestle's U.S. candy business doesn't include the company's global chocolate brand KitKat or the Toll House baking line.

The sale of Nestle's U.S. candy business doesn't include the Toll House baking line or Kit Kat. While Kit Kat is Nestle’s global brand, Hershey owns the rights in the U.S.

Nestle — which also owns Purina, Coffee-Mate, Gerber and Stouffer’s — has been scooping up companies and shifting away from its confectionery roots. In September, Nestle acquired a majority interest in Oakland-based high-end specialty coffee roaster and retailer Blue Bottle Coffee for an undisclosed amount, and last month it announced plans to buy privately-held Atrium Innovations, a nutritional health products maker based in Quebec, for $2.3 billion.

The U.S. candy business sale is expected to be completed near the end of the first quarter, Nestle said.

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Both companies have long and storied histories in the European sweets world. Nestle began selling chocolate in 1904, and Ferrero was founded as a family business, originally a pastry shop, in 1946.

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