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VEVEY, Switzerland - Nestle SA announced today it is merging its U.S. ice cream business into Dreyer's Grand Ice Cream Inc. in exchange for $2.4 billion in stock in a deal that would give the world's biggest food and beverage company a majority stake in California-based Dreyer's, The Associated Press reports.
Under terms of the deal, Nestle would receive 55 million newly issued Dreyer's shares, boosting its stake in Dreyer's to 67 percent from the current 23 percent.
Oakland, Calif.-based Dreyer's says its flagship ice cream marketed as Dreyer's in Texas and the western United States and as Edy's in the rest of the country is the best-selling brand of packaged ice cream in the United States.
The deal follows Nestle's acquisitions of Germany-based ice-cream maker Schoeller Holding AG and the U.S.-based Haagen-Dazs in recent months.
Nestle's U.S. ice cream business will be merged with the existing Dreyer's organization, which will be headed by Dreyer's chief executive and chairman T. Gary Rogers. Dreyer's president, William F. Cronk, will retire when the deal closes.
The combined ice cream company will be headquartered at Dreyer's current offices in Oakland. Nestle will get three additional seats on an expanded Dreyer's board of 10 people. Nestle currently has two of eight Dreyer's board seats.
The deal is subject to regulatory and shareholder approval, the companies said. Nestle said the deal will result in cost cuts of around $170 million annually, to be completed in 2005.
The deal also contains terms that could result in Nestle taking full control of Dreyer's in 2006.
"This move underscores our commitment to growing and improving our ice cream business ... in the world's highest per capita consumption market, the USA," said Peter Brabeck, chief executive of Nestle.