US/RUSSIA: Wrigley acquires majority stake in Korkunov
US confectionery and gum group Wm. Wrigley Jr. Company has signed a purchase agreement to acquire an 80% initial interest in the Russian premium chocolate producer A. Korkunov for US$300m.
The US company said that the remaining 20% in the privately owned operation would be acquired over time.
The $300m consideration is to be offset in part by approximately $55m in cash tax benefits, Wrigley added, so the net cost of the transaction represents around three times Korkunov's 2006 sales, which are estimated to have been $100m.
Korkunov is the seventh largest producer in the Russian chocolate sector, and the number two player in the premium boxed chocolate segment, with its A. Korkunov brand.
"A. Korkunov has strong brands and is a key player in the premium chocolate segment in Russia, an already strong and dynamic geography for the Wrigley Company where we are the No.1 player in the chewing gum category," said Wrigley chairman Bill Wrigley, Jr. "Entering into the premium chocolate category is not only a great strategic fit and an expected driver of new growth opportunities in one of our top priority global geographies, it also represents an important addition to our competencies and has the long-term potential to create value in marketplaces around the world."
The acquisition remains subject to customary closing conditions, including certain regulatory clearances, the US company added.
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