All eyes on Ferrero's next generation

The maker of Nutella spread and Ferrero Rocher chocolates has long been viewed as an appetising target for rivals such as Mondelez International, Nestle. (Reuters)

The death of Italian billionaire Michele Ferrero could ultimately herald a deal involving the chocolate empire bearing his name, with the family's third generation leading it into a future of increasingly hungry multinationals.

The maker of Nutella spread and Ferrero Rocher chocolates has long been viewed as an appetising target for rivals such as Mondelez International, Nestle, Mars and Hershey.

But given the strength of its brands, the high margins on chocolate and sluggishness of packaged food overall, the Italian business could feasibly be on the shopping list of any global food company.

"Certainly there's more chance of a deal now than there was before; that absolutely must be true," said Andrew Cosgrove, EY's global lead analyst on consumer goods. "It was widely rumored that no deal would happen until this event."

Ferrero International, a conservative and secretive 69-year-old company, has largely shied away from the dealmaking that has marked the consumer goods sector's search for growth over the past decade.

But that could change, insiders say. Sources familiar with the company say that Ferrero had once considered a move on Cadbury but pulled back after the family patriarch rejected a push by his sons. Similarly, there were reports in 2013 that it held talks about a takeover by Nestle.

"The idea of a tie-up with Nestle could come back," a Ferrero manager told Reuters on condition of anonymity. "Giovanni (Ferrero, the CEO) always says the company is big but does not have critical mass to really be an international player, so sooner or later he could announce an acquisition. It was the father who blocked everything."

Other sources also said Ferrero could turn acquisitive to balance its portfolio, noting that it had considered buying United Biscuits and U.S. chocolate company Russel Stover, which ended up going to Swiss rival Lindt & Spruengli.

Apart from Western confectionery groups, Ferrero could also attract the attention of Turkey's Ulker Biskuvi, Korea's Lotte or private equity firms such as 3G Capital, which teamed up with Warren Buffett to buy Heinz.

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