Swiss food giant Nestle on Tuesday said it will acquire American Kraft Foods' frozen pizza business in the US and Canada paying $3.7 billion in cash.
The transaction would be completed this year after getting the US and Canadian regulatory approval, it said.
Kraft Foods' frozen pizza business includes brands such as DiGiorno, Tombstone, California Pizza Kitchen, Jack's and Delissio.
The acquisition is expected to provide a new strategic pillar to Nestle's frozen food portfolio in the US and Canada, where the firm has established a leadership in prepared dishes and hand-held product categories under the Stouffer's, Lean Cuisine, Buitoni, Hot Pockets and Lean Pockets brands.
"This frozen pizza business greatly enhances Nestlé's frozen food activities in North America, bringing together a selection of great US and Canadian brands," Nestle CEO Paul Bulcke said.
"With total sales of around 3 billion Swiss francs, Nestle will become the world leader in the attractive, fast-growing frozen pizza category," Bulcke added.
In a separate statement, Kraft said it would use the proceeds from the sale to fund a partial cash alternative to its cash and shares takeover offer worth 10 billion pounds for British chocolate and gum maker Cadbury.
Nestle said it did not intend to make, or participate in a formal offer for Cadbury.