Wrigley will purchase 80 percent of Russian company Odintsovo Confectionery

The Wm. Wrigley Jr. Company, Chicago, announced that it will acquire an 80% initial interest in Odintsovo Confectionery Plant Ltd (A. Korkunov), a privately held premium chocolate company in Russia, with the remaining 20% to be acquired over time. The $300 m being paid by Wrigley will be offset in part by approximately $55 million in cash tax benefits. The net cost of the transaction represents approximately 3 times 2006 sales, which are estimated at $100 million for the total company. The acquisition is subject to customary closing conditions, including certain regulatory clearances.


Founded in 1999 by two Russian entrepreneurs, Andrey Korkunov and Sergey Lyapuntsov, A. Korkunov has become the seventh largest player in the overall Russian chocolate category, which has an estimated value of $3.7 billion. It is also the No. 2 player in the overall premium-boxed chocolate segment, with its namesake brand -- A. Korkunov -- the top-seller in that highly competitive segment.


"We have always said we would enter the chocolate segment of the total confectionery business if the right opportunity to create value for the Wrigley Company became available -- and this acquisition presents such an opportunity," said Bill Wrigley, Jr., Executive Chairman of the Company and Chairman of the Board. "A. Korkunov has strong brands and is a key player in the premium chocolate segment in Russia -- an already strong and dynamic geography for the Wrigley Company where we are the No.1 player in the chewing gum category," he added.


Bill Perez, Wrigley s President and CEO also expressed his enthusiasm about the synergies that will be created through this acquisition. "The addition of this premium brand business builds upon our existing strength in Russia," said Perez. "Wrigley s excellent go to market business model, critical mass in terms of advertising, distribution reach throughout Russia and talented local team makes our Russian organization particularly well-positioned to help create new growth opportunities for these premium chocolate products. We also look forward to learning from A. Korkunov s success on shelf in the center of the store and gaining even deeper insights into the full range of Russian confectionery. We think it will be an outstanding combination."