Nestle Sells Its Haagen-Dazs Unit to PAI Venture for $4 Billion

Nestlé is going to sell its US ice cream business that includes Häagen-Dazs for a whole  $4bn in cash into a private equity-backed vehicle that would create a stronger challenger to Unilever in the frozen dessert category. The Swiss company announced this on Wednesday that it had plans to hand over the control of the company to Froneri, which is a joint venture that Nestlé created in 2016 with PAI Partners to manage Nestlé’s European ice cream business in about 20 different countries. Nestlé's ice cream brands include Dreyer’s, Häagen-Dazs, Outshine, Skinny Cow, Edy’s and Drumstick. Froneri has operations in Europe, Latin America, Africa and the Asia-Pacific region.

In a news release, Nestlé CEO Mark Schneider said, "We are now making this business our global strategic partner in ice cream and we are convinced that Froneri’s successful business model can be extended to the U.S. market. With this transaction, we are taking a decisive step towards our goal of achieving global leadership in ice cream."

According to several reports, the sale is likely to close in the first quarter of 2020, however that would be after the approval of customary regulations. Nestlé will still continue to manage its remaining ice cream businesses that are in Canada, Latin America and Asia as part of its market structure.

The chief executive officer of Froneri, Ibrahim Najafi in a statement said, "This is another milestone acquisition for Froneri as we drive towards becoming the world’s best ice cream company. We are delighted to be bringing such well-loved United States brands into the Froneri family. The acquisition is a testament to the strength and longevity of our relationship with Nestlé."

However, the $4 billion sale of its U.S. ice cream business, including the Häagen-Dazs and Drumstick brands, to Froneri has raised questions among several  investors about whether the Swiss-based food group will cash out of ice cream deal altogether.

Reports say Nestlé's chief executive officer, Mark Schneider has been restructuring the group’s portfolio as consumer tastes continues to shift toward healthy and convenient products and the growth of some of its more traditional lines slows down. A report by Euro-monitor shows that the ice cream businesses in the U.S. market share have declined in recent years, falling  from 19.3% in 2010 to 15% in 2018 as smaller independent brands have emerged.

The company has already sold its U.S. candy business to the owner of Nutella, Fererro Group and is now shopping its Herta cold cuts.