Nestle Scoops Up Dreyer's Ice Cream

Nestle SA agreed Monday to take a majority stake in Dreyer's Grand Ice Cream Inc. in a $2.4 billion deal that would allow the Swiss conglomerate to eventually scoop up all of California-based Dreyer's.

Nestle will merge its U.S. ice cream business, including the Haagen-Dazs brand, into Dreyer's, the best-selling brand of packaged ice cream in the United States. Nestle would receive 55 million newly issued Dreyer's shares, boosting its stake to 67 percent from 23 percent.

Under the second part of the deal, Dreyer's shareholders could sell their stock to Nestle for $83 a share in 2006. The following year, Nestle has the option of calling outstanding Dreyer's shares for $88 a share.

"Together, we'll be creating a dream team of the best people, brands, innovation and distribution in the business," said T. Gary Rogers, Dreyer's chief executive.

Dreyer's ice cream is marketed under the Dreyer's brand in the western United States and as Edy's elsewhere. The company, founded by William Dreyer and Joseph Edy in 1928, invented Rocky Road ice cream in 1929.

After the deal closes, Dreyer's will be headed by Rogers and based at Dreyer's offices in Oakland, Calif. Nestle will get three additional seats on an expanded Dreyer's board of 10 people. Nestle currently has two of eight board seats.

Dreyer's president, William F. Cronk, will retire when the deal closes. Rogers and Cronk purchased Dreyer's in 1977 and oversaw its expansion beyond the western United States.

The deal, expected to result in cost savings of about $170 million annually, is subject to regulatory and shareholder approval, the companies said. It is expected to close by the end of the year.

"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.

He noted that deal followed Nestle acquisitions of Germany-based ice-cream maker Schoeller Holding AG and the U.S.-based Haagen-Dazs in recent months.

Dreyer's had first-quarter sales of $292 million and a net profit of $1.3 million.

Nestle currently has a 13 percent share of the $25 billion annual global ice cream market.