Nestle expects to sell U.S. confectionery business in first quarter

FILE PHOTO - The Nestle logo is pictured on the company headquarters entrance building in Vevey, Switzerland February 18, 2016. REUTERS/Pierre Albouy

LONDON (Reuters) - Nestle NESN.S expects to sell its U.S. confectionery business in the first quarter of 2018, following a review launched earlier this year as part of efforts to improve performance at the world's largest packaged food company.

Nestle said in June it was exploring strategic options for the more than $900 million per year business, which includes Butterfinger and BabyRuth.

The review was limited to the United States, where Nestle is No. 4 behind Mars, Hershey HSY.N and Mondelez International MDLZ.O.

“Our strategic review has led to us deciding to divest the business and a robust sale process is currently underway which we expect to conclude in Q1 2018,” a spokeswoman said on Thursday.

Nestle’s chief executive Mark Schneider said in September that about 10 percent of the group’s sales would change in the mid-term as a result of buying and selling assets.

Nestle has been trying to make itself into a “nutrition, health and wellness” company by reducing sugar, fat and salt in its products and moving into health-related businesses. Earlier this month, it announced a deal to buy Canadian vitamin maker Atrium Innovations.

Nestle has stressed that its decision to sell the U.S. confectionery business is more about its weak competitive position rather than chocolate being unhealthy.

“Overall, confectionery category remains very attractive for the company,” Marco Settembri, Nestle’s head of Europe, Middle East and North Africa, said in September.

The company has developed a new technology with the potential to reduce sugar in some products without affecting the taste. It has said it would begin to use it next year.

Reporting by Martinne Geller; Editing by Elaine Hardcastle and Jane Merriman