PAI Partners Explores Options for Froneri Ice Cream Venture with Nestlé

Private equity firm PAI Partners is reportedly in the preliminary stages of considering various strategic options for its ice cream joint venture with Nestlé, which includes prominent brands such as Häagen-Dazs.

Transaction Snapshot

  • Deal Value: Potentially $10bn+
  • Deal Type: Options being explored include a sale or an initial public offering (IPO) of PAI's stake in Froneri.
  • Investors: Nestlé and PAI each own approximately 50% of Froneri.

Froneri was established in 2016 through a merger between Nestlé's European ice cream business and R&R, owned by PAI. In 2019, Nestlé divested its US ice cream operation to Froneri for $4 billion. Despite the potential exploration of a sale or IPO by PAI, Nestlé is expected to maintain its stake in the venture.

The ice cream market has recently faced challenges, including the rising popularity of weight-loss drugs like Ozempic and increased competition from new brands offering healthier alternatives. Paris-based PAI Partners, known for its strategic carve-outs, secured €7.1 billion ($7.6 billion) for its latest fund in November.

A potential sale of PAI's stake in Froneri would contribute to the significant activity in the food industry's mergers and acquisitions, which have totalled $73 billion over the past 12 months, as per Bloomberg data. If PAI opts for a European listing, it could revitalise an IPO market that experienced minimal activity last year.

Froneri faces competition from Unilever Plc's ice cream division. Since Hein Schumacher took over as CEO of Unilever, there has been increased speculation about the potential separation or sale of the company's nutrition or ice cream divisions. However, Schumacher has emphasised improving operational performance as the primary focus. In October, Unilever appointed Peter ter Kulve to lead the ice cream division, which is part of a broader restructuring of the company's leadership.

In the stock market, Nestlé's shares experienced a slight increase, rising 0.8% to 97.45 Swiss francs as of 5:19 p.m. in Zurich, indicating a positive investor response to these developments.

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