Nestlé buys US frozen foods giant

Nestlé extended its leading position in the US frozen foods market yesterday with the $2.6bn (£1.7bn) acquisition of Chef America, a privately-held frozen snack food company.

The deal brings the Swiss food giant popular brands such as Hot Pockets and Toaster Melts, which dominate the frozen hand-held food market in the United States.

Nestlé defended the purchase price, pointing out that tax benefits reduced the net price to around $2bn. Peter Brabeck, Nestlé's chief executive, said Chef America was a "strategically important complement" to its Stouffer's and Lean Cuisine frozen food lines, giving it two out of the three main categories in the booming frozen food market.

Nestlé, which has struggled to drive top-line growth from its mature chocolate confectionery and instant coffee products, has been bolstering its position in faster-growing US food segments such as pet food and water. It is close to gaining a victory over its rival Unilever in the US ice cream wars, following its proposed takeover of Dreyer's Grand Ice Cream.

Analysts said the deal was unlikely to stop Nestlé from bidding for Hershey, the US chocolate maker. "If Nestlé can keep writing cheques I don't think it will affect its interest," John McMillan, at Prudential Financial, said.