Cool Deal

Zurich, Dec. 19 (Reuters): Nestle SA is buying Delta Ice Cream for about 240 million euros ($287 million) to expand in the growing ice cream market in Greece and the Balkans, Nestle said on Monday.

Delta Ice Cream, which had sales of 122 million euros last year, is the leading ice cream business in Greece, Bulgaria, Macedonia, Romania, Serbia and Montenegro, Nestle said in a statement.

Over 96 per cent of Delta Ice Cream is owned by the Greek milk and dairy products group Delta Holdings. The deal is Nestle’s latest in a string of acquisitions over recent years. Kepler Equities analyst Jon Cox said the acquisition was part of a trend to target premium ice cream brands.

“We tend to view small bolt-on acquisitions in niche segments or regions as positive with ice cream part of the trading-up-to-premium-brands phenomena we are seeing in other food categories such as coffee and chocolate,” Cox said.

He, however, noted that the deal would make no material impact on Nestle group results.

The maker of Kit Kat chocolate wafers and Nescafe coffee has snapped up several ice cream makers, including the Dreyer’s Grand Ice Cream business and Moevenpick’s ice cream products in recent years.

Delta Ice Cream’s main brands include Nirvana, Boss, Aloma and Magnum, which it owns in Greece.

“It’s not a cheap acquisition (two times sales) but strategically it makes sense. The ice cream business is going nicely,” said the equities sales team at Julius Baer bank.

Nestle, the world’s biggest food maker, will buy the 96 per cent stake in Delta Ice Cream and make a mandatory offer to purchase the remaining shares.

Nestle reported higher-than-expected sales and reaffirmed its annual targets in October, avoiding the fate of rivals who have had to cut back their profit forecasts in the face of soaring commodity prices.

Earlier this month, Nestle said it would enter a joint venture for chilled dairy products with French dairy group Lactalis, with expected sales of about 1.5 billion euros in its first year.