Nestlé still pushing for Dreyer's deal

- Last updated on GMT

Related tags: Ice cream, Federal trade commission

Switzerland's Nestlé group remains confident that the takeover of
US ice cream group Dreyer's can be concluded.

The protracted negotiations over the acquisition of US ice cream group Dreyer's by Switzerland's Nestlé group show little sign of reaching a conclusion, but the European company remains confident that the takeover can be concluded.

According to press reports, Nestlé has today reiterated its firm belief that it will be able to reach an agreement with US regulators and close the Dreyer's deal, despite growing rumours in US financial circles that the takeover would be blocked once and for all.

Last month the US Federal Trade Commission blocked​ the takeover on the grounds that it would give Nestlé too large a share of the premium ice cream market. The decision came as something of a shock to the two companies which had worked closely with the FTC to try and ensure approval for the takeover, agreeing the sale of a number of brands.

Dreyer's shares dropped sharply earlier this week when it was revealed that a lawyer monitoring the deal had sent a note to clients suggesting that the FTC was preparing a definitive rejection of the deal. The Swiss company declined to comment when pressed by the Reuters​ news agency about the rumours, but did at least confirm that it was not walking away from the bid.

With control of two of the leading premium ice cream brands in the US market - Häagen-Dazs and Godiva - Nestlé and Dreyer's would have a stranglehold on consumers, leading to increased prices and reduced competition according to the FTC. Nestlé is counting on the Dreyer's deal to improve its chances of competing with Anglo-Dutch rival Unilever, which has extensive ice cream operations including the Breyer's brand in the US.

Even the agreement to sell a number of brands, including Dreamery and Whole Fruit sorbet, as well as the licence to produce ice cream under the Godiva brand, to Canada's CoolBrands International was not enough to convince the FTC that competition requirements would be satisfied, and the two companies may have to sell even more brands, such as the Starbuck's licensed products. But selling off too many Dreyer's brands will reduce the attraction of the company for Nestlé, and the group will have to juggle the demands of the FTC with its own business strategy.

Related topics: Manufacturers

Related news