The deal, if approved by German authorities, should be complete by 1 January next year and would give Nestlé a 49 per cent stake in Wagner, which has a 33 per cent market share and the number two position on the German frozen pizza market.
There remains good growth potential in Germany, despite frozen pizza being the nation's favourite frozen food. Frozen pizza market volume continued to grow by around 8 per cent per year, with a value of €700 million in 2004 compared to €670 million last year.
Nestlé obviously stands to do well from this market, with well-known Wagner brands such as Steinofen Pizza, Piccolinis pizza snacks and premium-priced La Pizza. But the company is also excited about taking the Wagner brand elsewhere.
"We see great opportunities to develop the business further, combining the Wagner management strengths, their strong brand equity and their product quality with Nestlé's global sales reach, our marketing know-how and research & development competences", said Patrice Bula, chairman of Nestlé Germany.
Wagner already exports its frozen pizzas to several western European countries and controls a quarter of the market in neighbouring Austria. Gottfried Hares, Wagner spokesperson, said everyone at the company welcomed the deal with Nestlé as forward-thinking business: "Nestlé is the ideal partner for developing our business further in Europe and in new markets."
The deal between Nestlé and Wagner is also the second in a week for Europe's frozen pizza industry. Last week Unilever announced it intended to sell its frozen pizza and baguette business to Wagner's main German rival, Dr. Oetker.
Unilever's business, like Wagner's, was also focused on western Europe and mainly on the Benelux countries. Now, with Dr. Oetker's pizza specialism and reputation as a quality brand, Unilever's old business could provide stiff competition for a Wagner-Nestlé partnership looking to expand in similar areas.