Kraft to Sell Candy Brand to Wrigley
CHICAGO - The Wm. Wrigley Jr. Co., the world's largest chewing gum maker, is poised to acquire Kraft Foods, Inc.'s sugar confectionery business -- which includes the large manufacturer's popular Life Savers, Creme Savers, and Altoids brands and comprises roughly 1.5 percent of Kraft's global revenues -- for $1.48 billion.
The transaction, which includes manufacturing facilities in Iowa, Tennessee, Romania, and the United Kingdom, as well as inventories and equipment located in two Canadian plants, is subject to regulatory approval but is expected to be complete by mid-2005. About 700 Kraft employees are expected to transfer to Wrigley as part of the sale.
"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," said Bill Wrigley Jr., chairman, president, and c.e.o. of the firm that bears his name. "Altoids and Life Savers are two such brands. We are extremely pleased to add them to our fast-growing 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, Wrigley's s.v.p. of worldwide strategy and new business, added, "The addition of these high-quality brands will align perfectly with our key strategic business choices," inclusive of additional diversification in the key mint, hard, and chewy candy categories; expanding Wrigley's worldwide portfolio; strengthening its overall position; and increasing efficiency across its confectionery supply chains.
As noted, the purchase price will be $1.48 billion, offset in part by approximately $300 million in cash tax benefits associated with amortization of intangible assets. The net acquisition cost of $1.18 billion represents 2.4 times estimated 2004 sales. To complete the all-cash transaction, the Wrigley Co. has received a commitment for a credit facility of $1.5 billion that will leave the company with a modest debt-to-market capitalization ratio.
The transaction, including one-time costs, is expected to be slightly dilutive to earnings in the first full year of combined operations and accretive thereafter. Said Ron Waters, Wrigley's c.o.o.: "We see the addition of these strong brands and confectionery expertise as a great strategic fit that will complement and enhance the already excellent organic growth of current Wrigley products. This is the next step in more fully leveraging our robust sales, marketing, and innovation infrastructure to become a broader-based confectionery company and to weave our brands even deeper into the fabric of everyday life around the world."
The transaction, which includes manufacturing facilities in Iowa, Tennessee, Romania, and the United Kingdom, as well as inventories and equipment located in two Canadian plants, is subject to regulatory approval but is expected to be complete by mid-2005. About 700 Kraft employees are expected to transfer to Wrigley as part of the sale.
"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," said Bill Wrigley Jr., chairman, president, and c.e.o. of the firm that bears his name. "Altoids and Life Savers are two such brands. We are extremely pleased to add them to our fast-growing 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, Wrigley's s.v.p. of worldwide strategy and new business, added, "The addition of these high-quality brands will align perfectly with our key strategic business choices," inclusive of additional diversification in the key mint, hard, and chewy candy categories; expanding Wrigley's worldwide portfolio; strengthening its overall position; and increasing efficiency across its confectionery supply chains.
As noted, the purchase price will be $1.48 billion, offset in part by approximately $300 million in cash tax benefits associated with amortization of intangible assets. The net acquisition cost of $1.18 billion represents 2.4 times estimated 2004 sales. To complete the all-cash transaction, the Wrigley Co. has received a commitment for a credit facility of $1.5 billion that will leave the company with a modest debt-to-market capitalization ratio.
The transaction, including one-time costs, is expected to be slightly dilutive to earnings in the first full year of combined operations and accretive thereafter. Said Ron Waters, Wrigley's c.o.o.: "We see the addition of these strong brands and confectionery expertise as a great strategic fit that will complement and enhance the already excellent organic growth of current Wrigley products. This is the next step in more fully leveraging our robust sales, marketing, and innovation infrastructure to become a broader-based confectionery company and to weave our brands even deeper into the fabric of everyday life around the world."