Nestle said Tuesday it has agreed to sell its US candy business to Italy's Ferrero for a whopping $2.8 billion in cash as the Swiss food giant shakes up its product portfolio.

Ferrero, known for its Tic Tac, Nutella and Ferrero Rocher brands but which has traditionally preferred organic growth to acquisitions, will now be picking up Crunch, Butterfinger and Baby Ruth from Nestle.

The sale will make Ferrero the third-largest confectionary company in the US market.According to media reports, Ferrero competed with major chocolate manufacturer Hershey and private funds, including Rhone Capital, to secure the deal.

Executive chairman Giovanni Ferrero said that after the acquisition the Ferrero Group 'will have substantially greater scale, a broader offering of high-quality products to customers...' in the United States, the world's largest confectionary market.

Nestle's chief executive Mark Schneider said the deal 'allows Nestle to invest and innovate across a range of categories where we see strong future growth and hold leadership positions, such as pet care, bottled water, coffee, frozen meals and infant nutrition.