Kraft Foods sell candy brands to Wrigley

Kraft Foods Inc., Northfield/ Illinois has agreed to sell its sugar confectionery business to Chicago-based Wm. Wrigley Jr.Co., the world’s largest chewing gum maker, for 1.48 bn (€ 1.1 bn). The proposed sale includes the Life Savers, Creme Savers, Altoids, Trolli (only in NAFTA region) and Sugus brands,which represent about 1.5 percent of Kraft’s global revenues. The deal includes manufacturing facilities in Iowa, Tennessee, Romania and Britain, as well inventories and equipment located in two Canadian plants, Indonesia and Thailand. About 700 Kraft employees, most in manufacturing positions, are expected to transfer Wrigley as part of the sale. Kraft will continue to provide certain sales, logistics,manufacturing and other support services during a transition period. The transaction, which is subject to regulatory approval, is expected to be completed by mid-2005 and will generate proceeds of $1 bn for Kraft.The contribution to earnings from this business in 2004 is estimated at 5 cents per share on revenue of about $490 m. Separately,Wrigley said it received a commitment for a credit facility of $1.5 billion to complete the transaction,which will slightly dilute earnings in the first full year of combined operations but add to them thereafter. “There are only a handful of confectionery brands around the world that have the combination of heritage and vitality that can match up with Wrigley brands,”commented Bill Wrigley,Jr.,Chairman,President& CEO.“Altoids and Life Savers are two such brands.We are extremely pleased to add them to our fastgrowing and dynamic portfolio of leading confections and are committed to leveraging their equity to create significant value for our business and our shareholders.With our confectionery focus and expertise, we look for these brands to flourish under the Wrigley umbrella and anticipate being able to take full advantage of their marketplace potential.” Peter Hempstead,Senior Vice President - Worldwide Strategy & New Business, added, “The addition of these highquality brands will align perfectly with our key strategic business choices. Specifically, this acquisition will provide additional diversification in key categories of mints and hard and chewy candy, expanding the portfolio we offer to our customers and consumers worldwide,strengthen the Company’s overall position in the world’s largest confectionery market, add scale and brand depth to an already robust innovation pipeline and increase efficiency across our confectionery supply chain.” Sales and profit continue to rise The chewing gum manufacturers have announced double digit growth in volume, sales and profits for the first three quarters of 2004. Total global sales by the end of September were up 20 % on the year before and totalled US$ 2.69 bn (US$ 2.18 bn), including a 5 % contribution to growth from recent acquisition Joyco. For the whole EMEAI region the growth of 28 % compared with the previous year was reported, mostly driven by strong sales in the UK,Russia and the Ukraine. During the first nine months of 2004 profits in EMEAI grew 12 % up to US$ 376 m (US$ 295 m).