In a bid to make its future sweet, Kraft Foods Inc. is all set to sell of its U.S. pizza unit to Nestle SA. The deal will help it improve its offer for acquiring stake in the British chocolate manufacturer Cadbury Plc.
Kraft expects to raise $3.7 billion by selling its pizza business, which includes brands like DiGiormo, Tombstone and California Pizza Kitchen. “Selling this business now not only delivers an attractive return for our shareholders, but enables us to better focus our resources on priority global brands and categories,” Irene Rosenfeld, Chairman and Chief Executive Officer of Kraft, said in a statement.
Kraft has tried to win the hearts of Cadbury’s shareholders by increasing the cash portion in its total bid by 60 pence per share. Now the offer stands at 360 pence per share. And since Kraft has reduced the share element in the offer, the total value of the deal remains unchanged. However, Cadbury has so far rejected the offers made by Kraft in past. “Kraft Foods is doing this because of the desire expressed by some Cadbury security holders to have a greater proportion of the offer in cash,” Kraft said in a statement.
Kraft arrived at the decision only after the Vevey, Switzerland-based Nestle said that it would be not bidding for Cadbury. Till now there had been speculations in the market that the Swiss company is also interested in acquiring stake in Cadbury, but the company brought an end to such discussions and rumours denying any such plans on Tuesday.
Now with Nestle moving out of Cadbury race and finalizing its deal for Kraft’s pizza unit, Kraft is now at a better position to carry on with its $16 billion hostile deal to take over Cadbury. Meanwhile, the details of the cash offer are expected to be finalized by January 19.