- The Washington Times - Monday, November 15, 2004

CHICAGO (AP) — The world of the dominant chewing-gum maker is about to get sweeter.

Looking to extend more of its marketing might from gum to candy, Wm. Wrigley Jr. Co. announced yesterday it has agreed to buy Life Savers and Altoids from Kraft Foods in a $1.48 billion cash deal that refocuses Kraft’s attention on its trademark supermarket products.

The agreement also includes the Creme Savers brand, as well as Trolli gummy candies, Sugus candies and other local and regional brands in the United States, Europe, Indonesia and Thailand.

But Altoids and Life Savers are by far the most sought-after prizes in the deal, which analysts expect to receive regulatory approval by mid-2005. Wrigley outbid Hershey Foods Corp., Mars Inc., Nestle SA and Cadbury Schweppes PLC for the Kraft sweets, which generate $490 million in annual sales.

“There are only a handful of confectionery brands around the world that have the combination of heritage and vitality that can match up with Wrigley brands,” said Bill Wrigley Jr., the chairman, president and CEO of Chicago-based Wrigley. “Altoids and Life Savers are two such brands.”

For Kraft, the sale offloads brands that produced just 1.6 percent of its $31 billion in revenue last year, along with $85 million in profits. According to analysts, the Northfield, Ill.-based food giant had about 4.7 percent of the U.S. confectionery market, to 7.8 percent for Wrigley.

“By enabling us to better focus our resources, the sale should create value for Kraft, as well as our employees, customers and shareholders,” Chief Executive Officer Roger K. Deromedi said.

Kraft decided recently to shed most of its confection brands, conceding that candy was one of four categories being “hammered” by competitors’ products and the impact of low-carb diets that forgo sweets and starchy foods.

After two years of sluggish results, the maker of Kraft cheese, Nabisco cookies, Maxwell House coffee and Oscar Mayer hot dogs also had pledged to get out of businesses that aren’t part of its core strategy.

Morningstar Inc. analyst Mark Hugh Sam said Kraft’s sweets division “fits better with a company like Wrigley, whose global confectionery brand portfolio carries a lot more bargaining power on the candy shelves of grocery stores. We think Kraft found out that it couldn’t easily extend its grocery dominance in product categories like cheese into unrelated categories like candy.”

The deal also is a big boost to Wrigley, he said, because “it continues to give credence to Bill Wrigley’s vision of transforming Wrigley from a chewing-gum company into a global confectionery business.”

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