Kraft makes € 5.3 bln offer for Danone Biscuit operation

Danone has confirmed that on July 3, 2007, Groupe DANONE’s Board of Directors decided to consider on an exclusive basis the offer made by Kraft Foods Inc. on July 2 to purchase DANONE’s Biscuits and Cereal Products business. This offer of € 5.3 billion is related to a business line with approximately €2 billion in sales in 22 countries. It does not include Groupe DANONE’s stakes in Biscuits businesses in Latin America (Bagley) or India (Britannia), and could lead to a definitive agreement during the last quarter of 2007, after consultations with employee representatives and pending regulatory approvals.

For Groupe DANONE’s Board of Directors, the offer of Kraft Foods represents a strong strategic and industrial opportunity for the Biscuits and Cereal Products business. Its future would be consolidated within a group which will place this business at the core of its strategy and invest in it over the long term. In this context, Groupe DANONE considered as decisive the fact that the geographic positions of Kraft and DANONE in Biscuits and Snacks are highly complementary and that Kraft’s offer includes two important elements:

- The continuation of the DANONE Biscuits division’s European activities as a distinct unit, which will be based in France and remain under the management of its current General Manager, Georges Casala, and his teams.

- The intent not to announce the closing of any of the DANONE Biscuit manufacturing facilities in France for at least three years after the transaction is signed.

According to DANONE CEO Franck Riboud, “This transaction would enable Groupe DANONE to fully concentrate its research and innovation efforts as well as its marketing, industrial, and commercial assets on two fast growth categories of food products with a strong health orientation: fresh dairy products and spring-water based beverages and mineral waters. Indeed, we have in these two activities a strong competitive advantage that this concentration would allow us to further reinforce”.

“Groupe DANONE is happy to have helped make the biscuits business and its brands a worldwide reference”, added Franck Riboud. “Today, the quality of the Kraft Foods offer is in line with the quality of the work done by our teams and provides them with new perspectives for their future. Thus, this project is a wonderful opportunity for all players concerned”. Groupe DANONE’s Biscuits and Cereal Products business has leadership positions in more than 20 countries. At the end of 2006, it has close to 15,000 employees and has 36 factories throughout the world. In 2006, sales volumes reached 660,000 tons with sales of €2 billion and operating results of €318 million.

The main international brands are LU, Petit Déjeuner, Cracotte, Ourson, Mikado, Pepito and Tuc. Besides, various local brands, part of the historical heritage, benefit in different countries from very strong positions, as Bolshevik in Russia, Opavia in Czech Republic, Győri in Hungary or Saiwa in Italy. (foodingredientsfirst.com)