Kraft Foods’ decision to sell its Post cereals business has led the US food giant to close a manufacturing site in Canada.
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Kraft announced that it plans to shut the facility in Cobourg, Ontario, after it yesterday (15 November) outlined the sale of the Post business to US private-label firm Ralcorp Holdings for US$2.6bn.
“I know this is an uncertain time for employees who are affected by today’s announcements. And this is an especially difficult time for those at our Cobourg plant,” said Rick Searer, executive vice president and president of Kraft North America.
Searer added: “We are grateful for the hard work and dedication of our talented employees who’ve helped build Post into a billion-dollar brand.”
Ralcorp will acquire four manufacturing facilities from Kraft, with around 1,250 employees joining the company.
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By GlobalDataThe “tax-efficient” deal will see Kraft will hand ownership of Post to Kraft shareholders in either a “split-off” or “spin-off” transaction.
A “split-off” would give Kraft shareholders the opportunity to exchange its shares in the US food giant for Ralcorp stock. A “spin-off” would involve a pro rata distribution of shares to Kraft investors.
Either way, Kraft shareholders will own around 54% of the enlarged Ralcorp business. Ralcorp investors will own the remaining 46% of the combined company.
“This is a transaction where everyone wins – Kraft, Ralcorp, our respective shareholders and employees,” said Irene Rosenfeld, Kraft chairman and CEO.
