Nestle S A : Nestlé to Sell Buitoni Pasta Brand's North American Business

By Laura Cooper

Nestlé SA is selling the North American business of its Buitoni pasta brand to a private-equity firm as the Swiss consumer-goods giant focuses on higher performing frozen brands like Hot Pockets, Stouffer's and Lean Cuisine.

The deal with Brynwood Partners marks the second time Nestle's North American arm has sold a business to private equity in recent months, and is part of a multiyear portfolio revamp.

Late last year, the company agreed to sell its U.S. ice cream business -- including well-known brands Haagen-Dazs and Drumsticks -- for $4 billion to Froneri International Ltd., an ice-cream company created in 2016 by Nestlé and European private-equity firm PAI Partners.

The two divestments are part of a broader strategy to focus on businesses where the food manufacturer can be a "strong number one or two" leader in a product category, Nestlé USA Chairman and Chief Executive Steve Presley said in an interview.

The deal values the Buitoni North American business at $115 million, according to a person familiar with the situation. The company will be known as Buitoni Food Company after the transaction. The deal includes the rights to the brand in the U.S., Canada and the Caribbean.

Nestlé will continue to use the Buitoni brand in some markets outside of North America, including in Europe, where it is used for pizza and chilled dough, according to a spokesman for Nestlé USA.

Founded as a pasta shop in Sansepolcro, Italy, in 1827, the Buitoni pasta brand has grown to include sauces, shredded cheeses and refrigerated pastas including tortellini and ravioli. Nestle bought the company in 1988.

Buitoni faces more competition, particularly from private label brands and other refrigerated pasta brands that have entered the arena in recent years, said Henk Hartong, chairman and chief executive at Brynwood.

"The Buitoni business has lost some momentum and market share," Mr. Hartong said. "It showed year-over-year declines and losses of customers, " he said.

The business had sales of approximately $130 million in 2019, he said.

The deal is the eighth time that Brynwood, a Greenwich, Conn.-based firm that focuses on consumer-facing brands, has bought a Nestlé unit, Mr. Hartong added. Prior acquisitions from Nestlé include Flipz chocolate-covered pretzels, Juicy Juice and Joseph's Gourmet Pasta.

Brynwood is buying the pasta maker because of its strong brand recognition and ability to grow as a stand-alone company. The firm has built its track record on buying brands from larger companies and helping them grow.

The pandemic also is boosting sales of many supermarket staples, including Buitoni. The sheer number of meals being made at home as people shelter in place through the coronavirus pandemic has boosted demand, Mr. Presley said.

Nestlé found Buitoni to be a "strong brand" over the course of its long ownership, according to Mr. Presley. Nestlé sold the unit through an auction that began before the pandemic, he said.

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