Snacks & Candy

Kraft Sells Fruit Snacks to Kellogg

Continues to refine portfolio

NORTHFIELD, Ill. -- Kraft Foods Inc. said it has agreed to sell its fruit snacks operation to the Kellogg Co., for approximately $30 million. The fruit snacks business generated net revenues of approximately $80 million in 2004.

The transaction will help Kellogg expand its fruit snacks business. In addition, Kellogg has acquired the Nickelodeon Fruit Snacks license commensurate with this sale.

This sale is part of our key strategy of transforming our portfolio, said Dave Johnson, Kraft's president of North America Commercial. [image-nocss] Through innovations, investments, acquisitions and divestitures, we're focusing our portfolio on businesses that offer Kraft sustainable competitive advantage.

The sale includes a manufacturing facility in Chicago. The plant has 300,000 sq. ft. of manufacturing, office and warehouse space, plus additional space for internal expansion and available land for external expansion. Kraft has approximately 400 employees at the facility, all of whom are expected to join Kellogg upon closing.

Kraft incurred an asset impairment charge of $93 million in the first quarter in recognition of the pending sale of this business. The transaction is expected to close at the end of June.

"We continue to pursue the right kind of opportunities to grow our snacks business consistent with our current strategy," said Jeff Montie, president of Kellogg North America. "We entered the fruit snacks business in 2003 and already Kellogg has become the second largest player in the category. This transaction positions us for even greater growth in this part of our business."

With 2004 sales of almost $10 billion, Battle Creek, Mich.-based Kellogg is the world's leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, frozen waffles, meat alternatives, pie crusts, and ice cream cones. The company's brands include Kellogg's, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, Murray, Austin, Morningstar Farms, Famous Amos, Carr's and Kashi. Kellogg products are manufactured in 17 countries and marketed in more than 180 countries.

Kraft Foods, Northfield, Ill., markets many of the world's leading food brands, including Kraft cheese, Maxwell House and Jacobs coffees, Nabisco cookies and crackers, Philadelphia cream cheese, Oscar Mayer meats, Post cereals and Milka chocolates, in more than 150 countries.

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