Nestlé eyes up Haagen-Dazs

Swiss food giant Nestle AG is poised to take control of Haagen-Dazs, one of the best-known brands of luxury ice cream, in a deal that should value the dessert brand at up to £1 billion (1.6 billion euros), according to a report in UK newspaper The Sunday Telegraph.

The move will make Nestle the third biggest ice cream business in America and bring it into head-to-head competition with Unilever PLC, which bought the Ben & Jerry's luxury ice cream business last year for £ 326 million (525 billion euros), the paper reported.

The deal has been triggered following last week's clearance by U.S. trade officials of Diageo PLC's US$ 11.2-billion (12.49 billion euros) sale of its Pillsbury food subsidiary, which owns Haagen-Dazs, to General Mills Inc.

Nestle now intends to exercise an option to buy Haagen-Dazs in America from General Mills and will begin talks soon about buying the rest of the brand rights worldwide, according to the paper.

A Nestle spokesman last week said that it was Nestle's intention to exercise its contractual rights over Haagen-Dazs although detailed talks about the worldwide future of the brand may have to wait until integration of Pillsbury and General Mills was under way, it said.

Pillsbury entered an agreement with Nestle in 1999 which combined their ice cream brands in the U.S. in a 50/50 joint venture.

As part of the deal Nestle took a call option on Pillsbury's half of the business.

The option gives it the right to buy out its partner if it undergoes a change of control, the paper reported.

Analysts believe the deal is likely to value Haagen-Dazs in the U.S. at about $ 600 million (669 million euros).

Nestle is also keen to secure the rights to the brand worldwide and General Mills has a put option allowing it to sell the international rights to Nestle which could be worth another $ 400 million (446 billion euros).