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Report: Ferrero considering Nestlé confectionery purchase

Swiss-based food company may have a potential buyer in Ferrero

Ferrero, the Italian manufacturer of branded chocolate and confectionery products, is eyeing Nestlé's U.S. candy business, according to U.S. news publication DealReporter.

Ferrero declined to comment on rumours surrounding a possible deal, which analysts have said could be worth as much as US$3 billion.

In June Nestlé said it would wrap up a review of its strategic options for its U.S. candy business -- which represents about 3% of its U.S. sales -- by the end of the year. Butterfinger, Crunch, BabyRuth and Nerds are among the Swiss company's U.S. confections and offloading them could free up resources needed to shift its focus to higher growth areas. Last month, for instance, Nestlé’s U.S. food and beverage division acquired a minority stake in Freshly, a meal delivery startup that operates in 28 states.

Nestlé said its first-half earnings were up 19% due to a one-time tax expense that impacted profit a year earlier, while sales slipped as a result of divestments and currency issues. It recently reported net profit of $5.1 billion for January-June and said total sales were down 0.3%.

Nestlé, which does not break down earnings by quarter, confirmed its full-year outlook for organic growth "in the lower half of the 2 to 4% range."

CEO Mark Schneider said "profitability is in line with our expectations, as restructuring savings and efficiencies have offset higher commodity costs."

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