Kraft offers to acquire Danone''s biscuits and cereals division for $7.20 billion

03 July 2007

Mumbai: Kraft Foods, the world''s biggest cookie maker, has offered to acquire Danone''s biscuit and cereals division for €5.3 billion ($7.20 billion / Rs21,544.5 crore) in cash, the food groups said.

Kraft''s acquisition of Danone''s cookie unit, which includes the LU, Prince and Tuc brands, will give the US food giant a stronger foothold in Europe and in emerging markets and allow Danone to focus on further boosting the health range in its fast-growing fresh dairy and drinks business.

The offer exceeds the €3.5-€4 billion reported earlier by the media and is more than double the €2.2 billion in sales the unit made last year. Danone''s stakes in its Indian and Latin American businesses are not part of the deal.

Danone and Kraft, maker of Oreo and Chips Ahoy! cookies as well Philadelphia cheese and Milka chocolate, expect to reach a final agreement by the last quarter of 2007.

Under the preliminary deal, Kraft will not close any of Danone''s biscuit manufacturing facilities in France for at least three years after the transaction is signed and said the European biscuit headquarters would stay in the Paris region for the foreseeable future.

"This proposed acquisition makes great sense for Kraft," said Irene Rosenfeld, Kraft chairman and chief executive officer.