The Ferrero Group, a family-owned, Italian sweet packaged-food company, will look at acquisitions in snacking, confectionery, chocolate, mints, biscuits and ice cream, with a focus on Europe and the US, three sources familiar with the company told Mergermarket.

The US is a key growth market for the company, alongside Europe, two of the sources said. In July, Ferrero-related CTH Invest announced the acquisition of US-based biscotti maker Nonni’s Bakery, one of the sources said.

Ferrero is a truly global business, with global brands such as Tic Tac and Nutella, so acquisitions elsewhere are not ruled out, another of the sources said. Its US subsidiary Ferrara Candy Company acquired Brazilian sweets and snacks company Dori Alimentos in 2023.

“They’ve done tonnes in the UK, they’ve bought half of the healthy snacking and biscuits businesses that have come to market recently”, a third source said, pointing to Ferrero’s deals for Burton’s Biscuits (2021) and Fox’s Biscuits (2020).

Healthy and sweet 

Ferrero will look at acquisitions among products across its categories: snacking, confectionery, chocolate, mints, biscuits, and ice cream, with a preference for branded products, the sources said.

It is interested in better-for-you products as well as sugary snacks, two of the sources noted. “Clearly, snacking is what they’ve lasered in on, whether it’s sugar or better for you doesn’t seem to matter”, one said.

While publicly listed food companies such as Unilever [LON:ULVR] and Nestle [SWX:NESN] are making efforts to reduce sugar in their portfolios, and may be less inclined to buy sugary snacks businesses, Ferrero, as a private company, does not have to answer to shareholders in the same way, one source noted. Sugary-snacks businesses can be very profitable, and this way Ferrero can acquire such businesses at good value, this source said.

On the healthier side, the company acquired Irish vitamin and protein-bar manufacturer Fulfil Nutrition in 2022, and UK snack-bar and cereals company Eat Natural in 2020.

It has also been mooted as a potential buyer for UK snack bar producer Halo Foods, which was in a sale process earlier this year, as reported by Mergermarket.

“Ferrero has bought everything that moves in healthy snacking”, one source said.

Ice cream is a very important category for Ferrero, after first buying into the segment a few years ago, another of the sources said. It bought a 70% stake in Spanish The Ice Cream Factory Comaker (ICFC, formerly known as Avidesa) in 2019, and later, in 2021, launched its own Ferrero Rocher and Raffaello ice cream sticks. It is expected to make more acquisitions in this area, this source said.

A snacking ice cream business such as UK-based mochi ice cream producer Little Moons could be a logical target for Ferrero, two of the sources said. L Catterton announced it had acquired a significant minority shareholding in Little Moons in 2022, to enable the company to scale globally.

The big stuff 

Ferrero is quite a secretive business, and it is not known how much spending power the group has, two of the sources said. The Ferrero family is the richest family in Italy, and Giovanni Ferrero, the company’s chairman, is estimated to have a USD 43.8bn net worth in 2024, according to Forbes.

Rumours a few years ago said the group had EUR 35bn spending power, and this figure would likely be higher now, one source said, while another source cited a rumour that the business generates more than EUR 1bn per year in cash.

Using cash plus debt financing, Ferrero would likely have the firepower to acquire Unilever’s ice-cream unit, or Nestle [SIX:NESN] and private equity firm PAI joint-venture Froneri, both of whose owners have considered their options lately, two of the sources said. They have been reported to be valued at GBP 15bn and EUR 10bn, respectively.

Ferrero is a large-scale business, and it does not have the pressure to pay out dividends to shareholders, so it may as well spend the cash on growing the business for the next generation, one source said. However, an acquisition of this size might still be unlikely, they added.

“If Ferrero wanted to push and borrow a lot of money, they could. But buying something like Unilever ice cream or Froneri would be betting the farm”, the source said.

It is more likely that Ferrero would continue to make acquisitions worth “hundreds of millions to a couple of billion” euros, this source said.

Ferrero’s largest acquisition to date was in 2018, when it bought Nestle’s US confectionery business, including chocolate brands such as Butterfinger, Crunch and BabyRuth, for CHF 2.8bn in cash.

For its financial year ending 31 August 2023, Ferrero reported EUR 17bn turnover, a 20.7% increase compared with the previous year and a long way from its beginnings in 1946 as a small pastry shop in Alba, Italy.

Ferrero commented that its core business is in chocolate confectionery, sugar confectionery, biscuits and cookies, bakery and ice cream, with a global focus, while declining to comment further.