Nestle said it will receive 55 million shares of Dreyer's, the Oakland, Calif.-based packaged ice cream player that is the best-selling brand in the U.S. It packages its ice cream under the Dreyer's name in the Western U.S. and as Edy's in the East. Dreyer's claims 19% of the market, ahead of Unilever Bestfoods' Breyer's, with 12%, and Ben & Jerry's, with 5%.
The combination will increase Nestle's current stake in Dreyer's from 23% to 67%.
Nestle said the combination would "produce significant operating efficiencies" that are expected to create $170 million in savings by 2005.
"Strategically it certainly makes sense to tie the businesses together, bringing in Dreyers DSD [direct store distribution system] and more than doubling U.S. ice cream sales," said
Nestle Ice Cream Co. was created as a joint venture between Nestle and Pillsbury in 1999 and is comprised of the Nestle USA novelty ice cream business and the Haagen-Dazs frozen dessert businesses.
Last December Nestle, based in Vevy, Swizterland, acquired the remaining 50% stake in the joint venture with Pillsbury and General Mills, which included Haagen-Dazs in North America. Nestle Ice Cream Co. brands include Haagen-Dazs, Drumstick, Nestla Crunch and Butterfinger.
Dreyer's lines also include Dreamery, Starbucks and Godiva.