PAI's R&R in ice-cream joint venture talks with Nestlé

The two firms are currently in "advanced discussions", according to Nestlé. Should the deal go ahead, the merger would take place at some point in 2016.

Under the terms of the proposed joint venture, R&R would commit its entire business to the enlarged group, while Nestlé would contribute its ice-cream businesses in Europe, Egypt, the Philippines, Brazil and Argentina. Its European frozen food businesses (excluding pizza) would also be part of the deal. Each side would own an equal share in the resulting entity.

R&R and Nestlé already have a shared history: earlier this year, the former acquired the ice-cream activities of Nestlé South Africa. The deal was understood to have been financed via R&R's balance sheet.

PAI struck a deal to buy R&R Ice Cream from Oaktree Capital for €850m in 2013. Oaktree had acquired Richmond Foods in 2006 and subsequently merged the company with German ice-cream firm Roncadin to form R&R. PAI turned to a €253m PIK toggle note to finance the acquisition, which allowed it to keep R&R's existing senior secured bonds in place.

R&R launched the offering of senior secured notes worth £315m to refinance its existing bonds in 2014. The notes mature in 2020.

Yorkshire-based R&R sells its products under a variety of brands including Fab Lollies, Kelly's Cornish Ice Cream and Skinny Cow. James Lambert and Jonathan Ropner founded the business in 1985.

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