Nestle Acquires Kraft Pizza: Funds Offer for Cadbury
Nestle agrees to acquire Kraft Foods' frozen pizza business in the United States and Canada for USD 3.7 billion in cash. The business includes brands such as DiGiorno, Tombstone, California Pizza Kitchen, Jack's and Delissio. This frozen pizza business provides a new strategic pillar to Nestle's frozen food portfolio in the United States and Canada. The acquisition is expected to bring leadership in the frozen pizza category, where Nestle only had a minor presence until now, and builds on Nestle's existing pizza know-how and operations in Europe. The transaction is subject to United States and Canadian regulatory approval and is expected to be completed in 2010.
Paul Bulcke, CEO of Nestle, says, "This frozen pizza business greatly enhances Nestle's frozen food activities in North America, bringing together a selection of great US and Canadian brands, industry-leading R&D and excellent route-to-market capabilities, which complement our existing ice cream direct-store-delivery. With total sales of around CHF 3 billion, Nestle will become the world leader in the attractive, fast-growing frozen pizza category."
Following this news, Kraft Foods is now announcing it will use an amount equivalent to the full net proceeds from the sale (less taxes and deleveraging to maintain its investment grade credit rating) to fund a partial cash alternative as part of its offer for Cadbury plc.
Kraft Foods is doing this because of the desire expressed by some Cadbury Securityholders to have a greater proportion of the offer in cash and because Kraft Foods shareholders have expressed a desire for Kraft Foods to be more sparing in its use of undervalued Kraft Foods Shares as currency for the offer.
Kraft Foods continues to believe that its share price is depressed as a consequence of a number of short term factors which it believes will dissipate once the uncertainty surrounding its offer for Cadbury is resolved. Therefore, it will apply an amount equivalent to the net proceeds from the pizza sale, estimated to be 60 pence per Cadbury Share or 240 pence per Cadbury ADS, to fund a Partial Cash Alternative to its offer to acquire Cadbury. Kraft Foods will announce the detailed terms of the Partial Cash Alternative on or before Jan. 19 2010 (being the last day for Kraft Foods to amend the terms of the offer).
Paul Bulcke, CEO of Nestle, says, "This frozen pizza business greatly enhances Nestle's frozen food activities in North America, bringing together a selection of great US and Canadian brands, industry-leading R&D and excellent route-to-market capabilities, which complement our existing ice cream direct-store-delivery. With total sales of around CHF 3 billion, Nestle will become the world leader in the attractive, fast-growing frozen pizza category."
Following this news, Kraft Foods is now announcing it will use an amount equivalent to the full net proceeds from the sale (less taxes and deleveraging to maintain its investment grade credit rating) to fund a partial cash alternative as part of its offer for Cadbury plc.
Kraft Foods is doing this because of the desire expressed by some Cadbury Securityholders to have a greater proportion of the offer in cash and because Kraft Foods shareholders have expressed a desire for Kraft Foods to be more sparing in its use of undervalued Kraft Foods Shares as currency for the offer.
Kraft Foods continues to believe that its share price is depressed as a consequence of a number of short term factors which it believes will dissipate once the uncertainty surrounding its offer for Cadbury is resolved. Therefore, it will apply an amount equivalent to the net proceeds from the pizza sale, estimated to be 60 pence per Cadbury Share or 240 pence per Cadbury ADS, to fund a Partial Cash Alternative to its offer to acquire Cadbury. Kraft Foods will announce the detailed terms of the Partial Cash Alternative on or before Jan. 19 2010 (being the last day for Kraft Foods to amend the terms of the offer).
As of 1.00 p.m. (London time) on Jan. 5 2010, being the first closing date of the offer, Kraft Foods had received valid acceptances of the offer in respect of a total of 20,917,708 Cadbury Shares (including those represented by Cadbury ADSs), representing approximately 1.52 per cent. of the existing issued share capital of Cadbury, which Kraft Foods may count towards the satisfaction of the acceptance condition to the offer. So far as Kraft Foods is aware, none of these acceptances had been received from persons acting in concert with Kraft Foods.
Cadbury Securityholders who have not yet accepted the Offer are urged to do so as soon as possible and in any event by 1.00 p.m. (London time) on Feb. 2 2010.
Cadbury Securityholders who have not yet accepted the Offer are urged to do so as soon as possible and in any event by 1.00 p.m. (London time) on Feb. 2 2010.
