NEW YORK (CNN/Money) - Nestle SA said Monday it will merge its ice cream brands with Dreyer's Grand Ice Cream Inc. and take a majority stake in Dreyer's with the possibility of taking full control in four years.

Shares of Dreyer's (DRYR: up $24.42 to $67.21, Research, Estimates) gained more than 57 percent in afternoon trading on Nasdaq while Nestle shares rose about 0.3 percent on the Zurich stock exchange.

Under the agreement, Nestle will sell its ice cream brands, including Haagen-Dazs and Drumstick, to Dreyer's for 55 million newly issued shares, increasing Nestle's stake in Dreyer's to 67 percent from 23 percent.

Nestle will be able to take full control of Oakland, Calif.-based Dreyer's through a share purchase program beginning in 2006, when Dreyer's shareholders will be able to sell shares to Nestle for $83 each for five-and-a-half months.

Nestle will take a 67% stake in Dreyer's

If Nestle fails to take full control of Dreyer's with this offer, Dreyer's shareholders will be able to sell shares to Nestle for $88 each for six months in 2007.

"Our long-term investment in Dreyer's speaks to the tremendous upside we see in the ice cream business in North America and our confidence that Dreyer's has the right team in place to lead the industry," Nestle CEO Peter Brabeck-Letmathe said.

Dreyer Chairman and CEO T. Gary Rogers will retain his positions with Brabeck-Letmathe serving as vice chairman. Dreyer President William F. Cronk, a longtime business partner of Rogers, will retire when the deal closes.

Through its flagship Dreyer's and Edy's brands, Dreyer's had first-quarter sales of $292 million and a net profit of $1.3 million. Nestle currently has 13 percent of the $25 billion annual global ice cream market.  

--from staff and wire reports