|Acquiring Company:||Wm. Wrigley Jr. Company View Profile Add Homepage Google Search|
|Target Company:||Kraft Foods Inc View Profile Add Homepage Google Search|
|Price:||$1.5 BLN million|
|Announced:||Nov 15, 2004|
Press Release Source: Kraft Foods Inc.
Kraft Foods to Sell Sugar Confectionery Business as Part of Its Sustainable Growth Plan
Monday November 15, 8:22 am ET
NORTHFIELD, Ill.--(BUSINESS WIRE)--Nov. 15, 2004--Kraft Foods Inc. (NYSE:KFT - News), a global leader in branded food and beverages, announced today that it has agreed to sell substantially all of its sugar confectionery business to the Wm. Wrigley Jr. Company, a leading manufacturer and marketer of gum and confectionery, for approximately $1.5 billion. The proposed sale includes the Life Savers, Creme Savers, Altoids, Trolli and Sugus brands, which represent about 1.5% of Kraft's global revenues.
"We continue to make significant progress on our Sustainable Growth Plan, which has led to encouraging momentum in our top-line growth," said Roger K. Deromedi, Kraft's Chief Executive Officer. "This divestiture is part of our strategy to transform Kraft's portfolio. By enabling us to better focus our resources, the sale should create value for Kraft, as well as our employees, customers and shareholders."
The sale includes sugar confectionery manufacturing facilities in Creston, IA; Chattanooga, TN; Brasov, Romania; and Bridgend, United Kingdom; as well as inventories and equipment for the confectionery business located in two Canadian facilities - Mount Royal, Quebec, and Cobourg, Ontario.
Approximately 700 Kraft employees in the sugar confectionery business, most in manufacturing positions, are expected to transfer to Wrigley as part of the sale. "Our employees have done an outstanding job building some of the top brands in the confectionery industry," said Deromedi. Kraft will continue to provide certain sales, logistics, manufacturing, and other support services during a transition period.
Bill Wrigley, Jr., President, CEO and Chairman of Wrigley, said, "We are pleased to have come together on this agreement with Kraft. With our confectionery focus and expertise, we look for these brands to flourish under the Wrigley umbrella and anticipate being able to take full advantage of their marketplace potential."
The transaction, which is subject to regulatory approval, is expected to be completed by mid-2005. It will generate after-tax cash proceeds of approximately $1.0 billion for Kraft, and is expected to result in an after-tax book loss of approximately $370 million ($.22 per share). The contribution to earnings from this business in 2004 is estimated at $.05 per share on revenues of approximately $490 million; after the closing, a portion of this contribution will be offset by the use of the cash provided by the sale.
Kraft Foods markets many of the world's leading food brands, including Kraft cheese, Maxwell House and Jacobs coffees, Nabisco cookies and crackers, Philadelphia cream cheese, Oscar Mayer meats, Post cereals and Milka chocolates, in more than 150 countries.
Forward-Looking and Cautionary Statements
This press release contains projections of future results and other forward-looking statements. One can identify these forward-looking statements by use of words such as "strategy," "expects," "plans," "anticipates," "believes," "will," "continues," "estimates," "intends," "projects," "goals," "targets" and other words of similar meaning. One can also identify them by the fact that they do not relate strictly to historical or current facts. These statements are based on the company's assumptions and estimates and are subject to risks and uncertainties. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the company is hereby identifying important factors that could cause actual results and outcomes to differ materially from those contained in any forward-looking statement made by or on behalf of the company; any such statement is qualified by reference to the following cautionary statements.
Each of the company's segments is subject to intense competition, changes in consumer preferences and demand for its products, including low carbohydrate diet trends, the effects of changing prices for its raw materials and local economic and market conditions. Their results are dependent upon their continued ability to promote brand equity successfully, to anticipate and respond to new consumer trends, to develop new products and markets, to broaden brand portfolios, to compete effectively with lower priced products in a consolidating environment at the retail and manufacturing levels and to improve productivity. The company's results are also dependent on its ability to consummate and successfully integrate acquisitions and to realize the cost savings and improved asset utilization contemplated by its restructuring program. The company may, from time to time, divest businesses that are less of a strategic fit within its portfolio, and its results may be impacted by either the gains or losses, or lost operating income, from the sales of those businesses. In addition, the company is subject to the effects of foreign economies, currency movements, fluctuations in levels of customer inventories and credit and other business risks related to its customers operating in a challenging economic and competitive environment. The company's results are affected by its access to credit markets, borrowing costs and credit ratings, which may in turn be influenced by the credit ratings of Altria Group, Inc. The company's benefit expense is subject to the investment performance of pension plan assets, interest rates and cost increases for medical benefits offered to employees and retirees.
The company's assessment of the fair value of its operations for purposes of assessing impairment of goodwill and intangibles is based on discounting projections of future cash flows and is affected by the interest rate market and general economic and market conditions. The food industry continues to be subject to recalls if products become adulterated or misbranded, liability if product consumption causes injury, ingredient disclosure and labeling laws and regulations and the possibility that consumers could lose confidence in the safety and quality of certain food products. The food industry is also subject to consumer concerns regarding genetically modified organisms and the health implications of obesity and trans-fatty acids. Developments in any of these areas could cause the company's results to differ materially from results that have been or may be projected by or on behalf of the company. The company cautions that the foregoing list of important factors is not exclusive. Any forward-looking statements in this press release are made as of the date hereof. The company does not undertake to update any forward-looking statement.
For more information, please visit our website at www.kraft.com
Kraft Foods Inc.
North American Media
Donna Sitkiewicz, 847-646-5770
Richard Johnson, 44 208 5802581
Mark Magnesen, 847-646-3194
Source: Kraft Foods Inc.
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|Dec 09 '07|