Nestlé is in advanced talks to join forces with European ice-cream company R&R to create a frozen giant employing more than 10,000 staff and operating in 20-plus countries across the world.
The Swiss food group confirmed it was close to agreeing the joint venture – worth a reported €3bn (£2.22bn) – with R&R to run almost all of its ice-cream business outside of the US.
Nestlé would contribute its ice cream businesses in Europe, Egypt, the Philippines, Brazil and Argentina to the new joint venture, the group added. It would also transfer its European frozen food businesses, excluding pizza.
R&R Group, which is based in the UK and owned by private equity firm PAI Partners, would join the new joint venture in its entirety.
“The proposed joint venture will capitalise on the complementary strengths and innovation expertise of the two companies,” the Nestlé statement said. “It will combine Nestlé’s strong and successful brands and experience in ‘out-of-home’ distribution with R&R’s competitive manufacturing model and significant presence in retail.”
If the merger goes ahead, following employee consultations and approval from regulatory authorities, the new JV would be operational next year, with each partner owning an equal share.
Senior executives from both partners would make up the board in equal proportion, with Luis Cantarell, Nestlé executive vice president Europe, Middle East and North Africa, to take up the role of chairman.
“We are excited about combining the respective talents of R&R and Nestlé’s people to drive further growth in this category,” R&R CEO Ibrahim Najafi said. “The vision of the proposed joint venture is to grow a unique consumer and customer focused ice-cream business serving all channels, delivering innovative, high-quality ice cream through investment in people, process and products. The ambition of the proposed joint venture will be to sell more ice cream through meeting and exceeding customer and consumer needs.”
Nestlé CEO Paul Bulcke added: “We have a long-standing relationship with R&R. Combining the capabilities of our two companies in this way would offer an exciting opportunity for future growth in a dynamic category.”
Founded in 1985, Yorkshire-based R&R is the largest private-label ice-cream manufacturer in Europe and the second largest ice cream manufacturer overall in Europe. Revenues at the group grew 26% in 2014 to €837.8m (£620.1m).
Its licensed portfolio includes Mondelez and Nestlé brands such as Cadbury Dairy Milk, Oreo, Milka, Smarties and Kit-Kat. In March, R&R, which has worked with the Swiss food giant for the past 14 years, bought Nestlé’s South African ice cream business for an undisclosed price.