ZURICH (CBS.MW) — Shares of Dreyer’s Grand Ice Cream soared more than 50 percent in early Monday trading after the company detailed its new deal with Swiss food giant Nestle.
The stock climbed $24.66, or almost 58 percent, to $67.45 in recent trading after Nestle SA said it would merge its U.S. ice cream business with Dreyer’s.
As part of the deal, Nestle will raise its stake in Dreyer’s to 67 percent. Nestle SA will merge its U.S. ice cream business with Dreyer’s Grand Ice Cream, the companies said.
Under the terms of the deal, Nestle, the world’s largest food company, will give its ice cream business to Dreyer’s in exchange for 55 million Dreyer’s shares, worth about $2.3 billion, and raise its stake in Dreyer’s to 67 percent from a current 23 percent. Dreyer’s will then offer to buy out minority shareholders at $83 per share in 2006.
Oakland, Calif.-based Dreyer’s
stock fell 17 cents on Friday to end at $42.79. The stock has traded in a range between $26.17 and $48.99 over the last 52 weeks.
The agreement signals Nestle’s (001205604)
expansion into the premium ice-cream business, following its takeover of the Haagen-Dazs brand in the U.S. and Canada late last year.
Gary Rogers, chief executive of Dreyer’s, will head up the new company and Dreyer’s stock will continue to trade on Nasdaq. Nestle will increase its representation on the Dreyer’s board of directors from two to five members, and the board will expand from eight to 10 members.
Nestle said the Dreyer’s takeover should generate $170 million in annual savings by 2005. Dreyer’s has the right to redeem all outstanding minority shares at $88 each in 2007.
The deal is subject to regulatory and shareholder approval. The companies said they expect it to be completed with in a year.
View more information: https://www.marketwatch.com/story/dreyers-stock-soars-on-nestle-deal