Hershey Trust 10/17

Traditional Media Coverage

1. Who buys Nestlé's chocolate shop in the US? (TRANSLATED)

   Oct 16, 2017 | Neue Zucher Zeitung (DE)

   By Dieter Bacmann
   
   
   For the American confectionery business of Nestlé several names circulate as possible prospective customers. Should Hershey do the race, it would not be without irony, as a look back shows.

Traditional Media Coverage

1. Who buys Nestlé's chocolate shop in the US? (TRANSLATED)

   Oct 16, 2017 | Neue Zucher Zeitung (DE)

   By Dieter Bacmann

   For the American confectionery business of Nestlé several names circulate as possible prospective customers. Should Hershey do the race, it would not be without irony, as a look back shows.

   The cleaning up of Nestlé CEO Mark Schneider also includes the question of how to proceed with the confectionery business in the USA. For this, the food group is examining "strategic options" , meaning that sales are also possible. With sales of around CHF 900 million, Nestlé's activities account for approximately 3% of US sales.

   The US economic news station CNBC now cites the chocolate producers Hershey and the confectionary Ferrara Candy .Is "Trolli" owner?

   For Ferrara it would be a broadening of the product range. Founded in 1908 by an Italian emigrant in Chicago, the company is mainly active in the field of delicacies ("Trolli"). The American company has been owned by the private equity company L Catterton since 2012.

   Here, however, one wonders how realistic a deal is in terms of dimensions. For Nestlé activities, prices range from $ 1.5 to $ 2.5 billion. Ferrara Candy, which has been merged with another company from its portfolio by its private equity owners, is expected to generate sales of approximately $ 1 billion. A sale of the company to a sum of the order of $ 1.3 billion, according to Reuters this year failed due to the price presentation.

   Hershey, on the other hand, could further expand its position as market leader in the US. Nestlé is there only fourth place, which should be a reason for the sales considerations. Hershey's new CEO, Michele Buck , recently mentioned the importance of scale effects in the event of any takeover. In 2016, Hershey rejected a bid from Mondelez for a takeover.

   The company from Pennsylvania would take over the Nestlé business to brands such as Butterfinger, BabyRuth, or SkinnyCow. The rights to the Kitkat brand in the United States already lie with Hershey. Internationally, Kitkat belongs to Nestlé. The company from Vevey had also announced to hold on to it and want to grow with the brand globally.Other signs 15 years ago

   If the fact that the division were actually sold and Hershey received the bid, that would arouse memories. About 15 years ago Nestlé and Hershey were already once because of a takeover in the talk. At that time it was speculated that Nestlé had submitted an offer for Hershey together with Cadbury. The deal, however, failed. The Hershey Trust, the charitable foundation, which still controls the chocolate maker , had changed its mind last minute.

   The news of the failure of the sale in September 2002 had helped Nestlé shareholders to ease their share price gains. The proposed deal with a volume of well over $ 10 billion was considered too risky.

   Regardless of what - hold or sell - Nestlé decides on the future of the US confectionery business until the end of the year. Reactions are likely to be less significant in view of the relatively much smaller importance in the present case.

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