NORTHFIELD, Ill.--(BUSINESS WIRE)--July 3, 2007--Kraft Foods Inc.
(NYSE:KFT) today announced that it has made a binding offer to acquire
the global biscuit business of Groupe Danone (NYSE:DA) for EUR 5.3
billion ($7.2 billion) in cash. As required by French law, Danone must
consult with its Works Council prior to entering into a definitive
agreement. Both companies anticipate that the transaction will close
by the end of the year.
"This proposed acquisition makes great sense for Kraft," said
Irene Rosenfeld, Kraft Chairman and CEO. "It will increase our
presence in snacks - our fastest growing global segment - and
transform our international business. This growing, high-margin
business will give Kraft another core growth category in Europe, a
cornerstone for faster growth in emerging markets, and the best
portfolio of iconic biscuit brands in the world."
The planned acquisition encompasses Danone's market-leading
biscuit brands - among them, LU, Tuc and Prince - and operations and
assets in 20 countries, including 36 manufacturing facilities. The
transaction does not include Danone's joint ventures in Latin America
During 2006, the biscuit businesses to be acquired generated
revenues of EUR 2.0 billion ($2.7 billion) and EBITDA of EUR 390
million ($525 million).
This acquisition will be subject to customary closing conditions,
including regulatory clearances.
Employing approximately 15,000 people around the world, Danone's
biscuit business has a successful business model, a talented
management team and a strong innovation pipeline.
The European headquarters of the biscuit business will remain in
the greater Paris metropolitan area for the foreseeable future. Kraft
does not intend to close any of the Danone biscuit manufacturing
facilities in France for at least three years after the agreement is
Once the transaction closes, Georges Casala, who currently runs
Danone's biscuit business, will join Kraft, as will key members of his
team. Casala will report to Sanjay Khosla, President of Kraft
International, and will manage the company's entire EU biscuit
business, including Kraft's recently acquired Iberian biscuit brands
With the acquisition, Kraft will gain broader operating scale and
additional reach across the globe. This includes critical emerging
markets - such as China, Russia, Poland, Indonesia and Malaysia - that
account for over 25% of the business. For example, Kraft will double
the size of its business in China and gain entry into the biscuit
category in Eastern Europe, notably in Russia, where Danone is the
share leader. The company also will establish footholds in Malaysia
"This transaction will create long-term value for our
shareholders, and we expect it to be accretive to earnings per share
in the first year," Rosenfeld said. "Our strong balance sheet enables
us to finance this acquisition with debt, while preserving our ability
to execute our long-term growth plan, including our previously
announced share repurchase program."
For many years, Kraft has been bringing consumers around the world
well-loved brands, including: Carte Noire, Grand' Mere and Jacobs
coffees; Cote d'Or, Milka and Toblerone chocolates; Philadelphia cream
cheese; and Oreo cookies.
"We look forward to welcoming the Danone biscuit team to the Kraft
family and to working together to build on the growth of their
wonderful biscuit brands around the world," Rosenfeld said.
NOTE: Journalists and analysts are invited to attend a joint
Kraft/Danone press conference at 11:00 a.m. CET (4 a.m. CDT, 5 a.m.
EDT) at the InterContinental Paris Le Grand Hotel: 2 Rue Scribe 75009
Paris, France. For access to the press conference via live audio
webcast, please visit www.kraft.com.
In addition, Kraft will host a call with analysts at 2 p.m. CET (7
a.m. CDT, 8 a.m. EDT). In the U.S., dial 888-802-8571; outside the
U.S., dial 973-582-2794. The access code is 8987385. For access to the
press conference via live audio webcast, please visit www.kraft.com.
Both events will be archived at www.kraft.com.
Kraft Foods (NYSE:KFT) is one of the world's largest food and
beverage companies, with annual revenues of more than $34 billion. For
over 100 years, Kraft has offered consumers delicious and wholesome
foods that fit the way they live. Kraft markets a broad portfolio of
iconic brands in 155 countries, including seven brands with revenue of
more than $1 billion, such as Kraft cheeses, dinners and dressings;
Oscar Mayer meats; Philadelphia cream cheese; Post cereals; Nabisco
cookies and crackers; Jacobs coffees and Milka chocolates. Kraft
became a fully independent company on March 30, 2007, and is listed in
the Standard & Poor's 100 and 500 indexes. The company is a member of
the Dow Jones Sustainability Index and the Ethibel Sustainability
Index. For more information, visit the company's website at
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 current 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. These factors include: (a) the effect
on the Company of competition in its markets, changes in consumer
preferences and demand for its products, including diet trends,
changing prices for its raw materials and local economic and market
conditions; (b) the Company's 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; (c) the Company's ability to consummate and successfully
integrate acquisitions and to realize the cost savings and improved
asset utilization contemplated by its restructuring program; (d) the
impact of gains or losses, or lost operating income, from the sales of
businesses that are less of a strategic fit within the Company's
portfolio; (e) the effects of foreign economies, changes in tax
requirements and currency movements; (f) fluctuations in levels of
customer inventories and credit and other business risks related to
the operations of the Company's customers; (g) the Company's access to
credit markets, borrowing costs and credit ratings; (h) the Company's
benefit expense, which is subject to the investment performance of
pension plan assets, interest rates and cost increases for medical
benefits offered to employees and retirees; (i) the impact of recalls
if products become adulterated or misbranded, liability if product
consumption causes injury, ingredient disclosure and labeling laws and
regulations, potential claims relating to false or deceptive
advertising under consumer protection or other laws and the
possibility that consumers could lose confidence in the safety and
quality of certain food products; and (j) 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. For additional information on these and other factors that
could affect the Company's forward-looking statements, see the
Company's filings with the Securities and Exchange Commission,
including the Company's most recently filed Annual Report on Form 10-K
and subsequent reports on Form 10-Q and 8-K. 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.
CONTACT: Kraft Foods Inc.
Donna Sitkiewicz, 847-646-4538 (North America)
Pascal Tanchoux, 00 33 1 47 42 48 10 (France)
Richard Johnson, 00 33 1 47 42 91 14 (EU)
Chris Jakubik, 847-646-5494
SOURCE: Kraft Foods Inc.