In a sweet deal for shareholders, Nestle SA agreed Monday to take majority stake in Dreyer’s Grand Ice Cream Inc. as part a $2.4 billion transaction that would allow the Swiss conglomerate to eventually swallow all of California-based Dreyer’s.
The company, which analysts expect will have annual sales of about $1.5 billion, would compete at the same level as the Anglo-Dutch conglomerate Unilever, whose brands include Ben & Jerry’s, Good Humor and Breyers.
“Together, we’ll be creating a dream team of the best people, brands, innovation and distribution in the business,” said T. Gary Rogers, Dreyer’s chief executive.
Pending shareholder and regulator approval, Nestle will merge its U.S. ice cream business, including the Haagen-Dazs brand, into Dreyer’s, which makes the best-selling packaged ice cream in the United States.
Nestle would receive 55 million newly issued Dreyer’s shares, boosting its stake to 67 percent from the current 23 percent.
Then, in 2006, Dreyer’s shareholders could sell their stock to Nestle for $83. The following year, Nestle has the option of scooping up all outstanding Dreyer’s shares for $88 a share.
“This is a best-case scenario for Dreyer’s Grand Ice Cream shareholders,” said John McMillin, food industry analyst at Prudential Securities.
The premium — the corporate equivalent of extra whipped cream on a sundae — drove Dreyer’s shares up more than 57 percent, or $24.50, to $67.29 in Monday trading on the Nasdaq Stock Market. They had closed at $42.79 a share Friday
In trading on the Zurich stock exchange, Nestle shares rose 0.6 percent to close at 364 Swiss francs ($233).
With about 17 percent of the worldwide market, the combined company’s brands will be on equal footing with Unilever’s brands.
Dreyer’s ice cream is marketed under the Dreyer’s brand in the western United States and as Edy’s elsewhere. The company, founded by William Dreyer and Joseph Edy in 1928, invented Rocky Road ice cream in 1929.
More recently Dreyer’s has partnered with Starbucks Corp. to create specialty coffee-flavored ice cream and with Godiva for chocolate flavors.