Kraft Foods, a global manufacturer of branded food and beverages, announced today that it has agreed to sell its sugar confectionery business to the Wm. Wrigley Jr. Company for approximately $1.5 billion.
The proposed sale includes the Life Savers, Creme Savers, Altoids, Trolli and Sugus brands, which represent about 1.5% of Kraft’s global revenues.
“This divestiture is part of our strategy to transform Kraft’s portfolio,” said Roger K. Deromedi, Kraft’s Chief Executive Officer. “By enabling us to better focus our resources, the sale should create value for Kraft, as well as our employees, customers and shareholders.”
The sale includes sugar confectionery manufacturing facilities in Creston, Iowa; Chattanooga, Tennessee; Brasov, Romania; and Bridgend, United Kingdom; as well as inventories and equipment for the confectionery business located in two Canadian facilities – Mount Royal, Quebec, and Cobourg, Ontario.
Approximately 700 Kraft employees in the sugar confectionery business, most in manufacturing positions, are expected to transfer to 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. It will generate after-tax cash proceeds of approximately $1.0 billion for Kraft, and is expected to result in an after-tax book loss of approximately $370 million, or $0.22 per share.