Nestle and PAI Partners will create a joint venture for the food giant’s frozen pizza business in Europe in a move aimed at generating better sales.
(Bloomberg) — Nestle and PAI Partners will create a joint venture for the food giant’s frozen pizza business in Europe in a move aimed at generating better sales.
The pizzas sold under brands Wagner, Buitoni and Garden Gourmet generate 400 million Swiss francs ($448 million) in annual sales.
PAI and Nestle will have a non-controlling stake in the business. The new structure echoes Nestle’s partial sale of its ice cream business through a joint venture with PAI, and is a bid to improve the performance of the unit, which has suffered low growth. It’s also a step toward exiting a lower-growth segment, bolstering headline organic growth.
“We took a thorough look at our European pizza business and concluded that partnering with PAI provides the best platform to develop its full potential,” Nestle executive Marco Settembri said.
Reducing the exposure to ready meals has the added benefit of cutting the proportion of the group’s portfolio that is considered unhealthy — an issue that is becoming increasingly important to investors.
Read more: Investor Lobbying Group Pushes Nestle to Make Food Healthier
The joint venture will be headquartered in Germany and operate two manufacturing facilities Germany and Italy. The terms of the deal, which is expected to close in the second half of the year, were not disclosed.
Nestle said it would close its Buitoni pizza factory in France after demand dropped following a bout of deadly E.coli infections that led to a product recall last year.
Read more: Nestle Closes Pizza Factory in France After Contamination Issues
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