Nestle sinks teeth into Kraft's frozen pizza business

VEVEY, Switzerland Nestle has agreed to acquire Kraft Foods' frozen pizza business in the United States and Canada for $3.7 billion in cash, the company announced Tuesday.

The business includes such brands as DiGiorno, Tombstone, California Pizza Kitchen, Jack’s and Delissio. This frozen pizza business provides a new strategic pillar to Nestle’s frozen food portfolio in the United States and Canada, where the company already has established a leadership in prepared dishes and hand-held product categories under the Stouffer's, Lean Cuisine, Buitoni, Hot Pockets and Lean Pockets brands, Nestle said.

Paul Bulcke, CEO of Nestle, said: "This frozen pizza business greatly enhances Nestle's frozen food activities in North America, bringing together a selection of great U.S. and Canadian brands, industry-leading R&D and excellent route-to-market capabilities, which complement our existing ice cream direct-store-delivery. With total sales of around CHF 3 billion, Nestle will become the world leader in the attractive, fast-growing frozen pizza category."

The acquisition brings leadership in the frozen pizza category, where Nestle only had a minor presence until now, and builds on Nestle’s existing pizza know-how and operations in Europe. It is a natural fit with Nestle’s focus on delivering convenient, premium, wholesome and nutritious frozen food for consumers around the world. The transaction is subject to U.S. and Canadian regulatory approval and is expected to be completed in 2010.

The United States is the largest pizza market in the world with consumer sales of about $37 billion, Nestle said.