Speculation remerges over PAI Partners’ Froneri stake with Nestlé

Speculation has resurfaced that PAI Partners is seeking to offload its stake in the Froneri ice-cream joint venture with Nestlé.

Investor heavyweight Goldman Sachs has been linked with an interest to take over the 50% holding in Froneri that PAI Partners owns, according to unnamed sources for the Financial Times.

The publication’s sources have put a €15bn ($17.1bn) valuation on the potential deal, including debt. The FT added that the asset-management division of Goldman Sachs would be the lead investor in a so-called continuation fund to be set up by PAI Partners.

Both investors declined to comment when contacted by Just Food today (1 August) as the FT said the transaction could be signed off as soon as September.

UK-based Froneri was set up in 2016 when Nestlé merged its European ice-cream operations with R&R Ice Cream, another UK business owned by PAI Partners.

The Froneri transaction combined Nestlé’s and R&R’s ice-cream operations in Europe, the Middle East, Argentina, Australia, Brazil, the Philippines and South Africa. While the US and Israel were not included in 2016, three years later the latter was also pulled under the Froneri umbrella.

Nestlé then sold its US ice-cream operations the same year – 2019 – to Froneri.

A couple of reports also emerged last year that PAI Partners was weighing up the future of its Froneri stake.

The first surfaced in January 2024, with Bloomberg sources suggesting the private-equity firm was in the ‘early stages’ of assessing options for its stake in Froneri. Those same sources said at the time that Nestlé was expected to retain its interest.

Nestlé also declined Just Food’s request for comment on the new speculation. Froneri had not responded.

Meanwhile, following the January report, another emerged from Bloomberg in May of that year suggesting a deal was being consider by PAI Partners along similar lines of what is now being proposed by the FT sources.

The FT went on to suggest in its report that PAI Partners had already put part of its 50% Froneri stake in a continuation vehicle in 2019, adding that fund is now approaching the end of its life cycle.

PAI Partners has also reportedly turned down offers from other investors interested in acquiring the Froneri holding, according to the publication’s sources, with one adding that the latest deal could see the private-equity firm share its stake with the proposed continuation fund.

Again, Nestlé would hold on to its own interest in Froneri, they said.

Froneri houses brands such as Cadbury, Connoisseur, Drumstick, Extrême, Häagen-Dazs (US), Maxibon, Milka, Mövenpick, Nuii, Oreo and Outshine, according to its latest annual report, some under license with the parent companies.

It also offers private label, which accounted for 13% of sales in 2024. Those sales amounted to €5.53bn, up 4.5% from the previous year.

Meanwhile, Froneri booked a profit before tax of €432.8m, compared to a corresponding loss of €56.6m. Net profit also turned around to deliver a positive €344.6m versus a €47.3m loss.