Ferrero gobbles-up Fannie May Confections

Steve’s breakdown: Right now, the Fannie May’s website is part of the 1-800-flowers website. Will that continue? Is this a reset for the brand? It’s worth looking into. See what Leonardo Limitone thinks. leonardo.limitone@ferrero.com

PARSIPPANY, NJ & LUXEMBOURG CITY, Luxembough: Ferrero International S.A., the Italian confectionery group, today announced a definitive agreement pursuant to which Ferrero will acquire Fannie May Confections Brands, a U.S. premium chocolate confectionery manufacturer of the Fannie May and Harry London brands, from 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) (“1-800-Flowers”). Additionally, Ferrero will enter into a strategic commercial partnership agreement, to be signed on or before the transaction close, to include selected Ferrero and Fannie May products in 1-800-Flowers gift baskets, towers and on e-commerce sites.

Ferrero and Fannie May share long histories and strong track records of growing premium confectionery brands with loyal followings.

Fannie May is a manufacturer of premium chocolates and confections and was founded in 1920 in Chicago, Illinois. Over nearly 100 years, the company has grown into one of the most well-known and loved premium confectionery brands in the Midwestern United States. Currently owned by 1-800-Flowers, a multi-brand provider of gourmet and floral gifts, Fannie May’s primary distribution channels include online – leveraging 1-800-Flowers.com’s e-commerce platform – telephone, QVC home shopping channel, a network of 80 retail stores operated by Fannie May, conventional retail, and private label/contract manufacturing activities. The company operates a production facility in Ohio and distribution centers in Ohio and Illinois, and employs 750 people full-time, with additional seasonal hires.

Founded in 1946, Ferrero is the third-largest company in the global chocolate confectionery market, with global sales expected to exceed $11 billion this year, distribution across over 160 countries, and a workforce of more than 30,000 people across 53 countries. Ferrero entered the U.S. in 1969 with Tic Tac® breath mints, which have become an icon in the U.S. breath mint market. The company subsequently introduced Ferrero Rocher® pralines and Nutella® hazelnut spread.

Giovanni Ferrero, Chief Executive Officer of the Ferrero Group, said, “Fannie May represents a strong strategic and cultural fit for Ferrero and we are happy that Fannie May’s talented people, premium brand and quality products will become part of the Ferrero Group. The U.S. is an important growth market for Ferrero and we are excited about the opportunity to support and grow a great American brand as we continue to expand our presence in the U.S.”

Mr. Paul Chibe, President and CEO of Ferrero North America, said, “Fannie May brings great people and a valuable manufacturing, distribution and retail network to Ferrero’s expanding U.S. presence. We plan to build on the Fannie May organization to support the growth of the Fannie May and Harry London brands. We are confident there are significant opportunities to enhance Fannie May’s growth, leveraging Ferrero’s capabilities to sell new products through a substantially larger base of channels.”

Following the transaction close, Fannie May will operate as a standalone entity and brand within the Ferrero Group, with support from Ferrero U.S.A., Inc. as needed. Ferrero plans to maintain Fannie May’s plant in Ohio, as well as its distribution centers in Ohio and Illinois. Ferrero will continue to operate a network of Fannie May retail stores, with plans to grow the network over time. Ferrero intends to work with the existing Fannie May management team on a go-forward basis.

Ferrero will maintain its U.S. headquarters in Parsippany, New Jersey and its assembly and packaging facility in Somerset, New Jersey.

The transaction is subject to customary closing conditions and regulatory approvals, and is expected to close by the end of May.

Davis Polk & Wardwell LLP served as legal counsel to Ferrero.

About Ferrero Group

Ferrero began its story in the town of Alba in Piedmont, Italy, in 1946. Today, its products have become part of the collective memory and customs of many countries, where they are truly loved generation after generation and often considered as cultural icons. Furthermore, Ferrero has social responsibility in its DNA. Product freshness and highest quality, careful selection of the finest raw materials, sustainable agricultural practices and continuous research and innovation are some of the key elements of Ferrero’s success. Moreover, Ferrero continues to invest in local communities thanks to the Ferrero Foundation, Michele Ferrero Entrepreneurial Project and the Kinder+Sport program. For more information, please visit www.ferrero.com or www.ferrerocsr.com.

About Fannie May Confections Brands

Fannie May was founded in 1920 by H. Teller Archibald in Chicago, Illinois. Through its Fannie May and Harry London brands, the company provides comprehensive offerings across key categories including chocolate bars and boxes and other snacks. Fannie May products are predominantly distributed through online channels leveraging the 1-800-Flowers.com e-commerce platform and its network of retail stores, primarily in Illinois, as well as through conventional retail and private label and contract manufacturing activities.

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