Kraft Foods announced today that it has agreed to sell its Hot Cereals business, including the Cream of Wheat brand and related assets to a subsidiary of B&G Foods for approximately $200m. The Cream of Wheat brand had net revenues of approximately $60m in 2006
‘Our decision to sell Cream of Wheat is part of a broader effort at Kraft to focus our portfolio,’ said Rick Searer, president, Kraft North America Commercial. ‘The divestiture allows us to focus our resources on businesses that offer potential long-term competitive advantages for us.’
The sale includes the Cream of Wheat and the Cream of Rice brands as well as certain manufacturing equipment. In anticipation of the sale, in the fourth quarter of 2006 Kraft recorded a pre-tax asset impairment charge of $69m.
The sale, which is subject to regulatory approval, is expected to be dilutive by approximately $(0.01) per share in 2007.