FTC MOVES TO HALT NESTLE-DREYER'S ICE CREAM MERGER

Announces It Will File Antitrust Suit Immediately

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WASHINGTON (AdAge.com) -- The Federal Trade Commission announced tonight it will take action to halt the planned $2.8 billion merger of
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ice cream giants Nestle Holdings and Dreyer's Grand.

Last June, Nestle and Dreyer's announced an agreement to combine their companies, which would become North America's largest ice cream business. They previously announced they would be willing to divest themselves of some of their brands in order to win FTC approval.

Antitrust suit
But that option appears to have been dashed by the FTC's decision to immediately file an antitrust suit to block the deal.

"This merger, as structured, would likely raise prices and reduce choice for consumers," said Joe Simons, director of the FTC's bureau of competition. The FTC said the purchase would give the combined company 60% of the premium ice cream business.

"The market for super-premium ice cream is highly concentrated, and this deal will reduce the number of significant competitors from three to two," he added, referring to Unilever's Ben & Jerry's Homemade ice cream brand.

The enterprise created by the combined companies would include premium ice cream brands such as Haagen Dazs, Godiva, Starbucks Nestle, Dreyer's and Edy's.

Joint statement
In a joint statement issue this evening, Nestle and Dreyer's said they were continuing "discussions with the staff of the FTC regarding the potential divestiture of assets announced earlier today as a means of addressing the staff's concerns with respect to the transaction."

The companies had earlier said they would sell a variety of ice cream brands and assets to CoolBrands International's Integrated Brands unit. The agreement calls for Dreyer's to sell its Dreamery and Whole Fruit Sorbet brands. Nestle's Nestle Ice Cream Co. unit will sell its frozen dessert distribution assets in a few metropolitan areas. CoolBrands markets the Eskimo Pie brand as well as frozen novelties and desserts under licensing agreements with brands including Tropicana, Welch's and Weight Watchers.

Nestle Holdings, based in Norwalk, Conn., includes Drumstick, Bon Bons, IceScreamer, Dole Fruit Bars, Butterfinger ice cream bars, and the Nestle Crunch Bar. It also owns the rights to manufacture and distribute Haagen-Dazs ice cream and frozen novelty products in the U.S. and Canada.

$800 million sales
Sales in 2001 of all Nestle ice cream products totaled nearly $800 million.

Dreyer's, based in Oakland, Calif., sells products under the Dreyer's brand in 13 Western states and Texas and under the Edy's brand name throughout the remaining regions of the U.S. Dreyer's also manufactures and sells the Dreamery line of ice cream and the Whole Fruit line of sorbet, as well as Starbucks brand ice cream products under a joint venture with Starbucks Corp., Godiva Brand ice cream under a long-term license with Godiva Chocolatier, and Dreyer's Presents under a joint venture with Mars.

$1.4 billion sales
Dreyer's total sales in 2001 were nearly $1.4 billion.

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