Kraft Foods has agreed to sell its Milk-Bone pet snacks brand and assets to Del Monte Corporation for US$580m. The Milk-Bone brand, which includes a wide variety of biscuits and treats for pets, generated approximately $180m in net revenue during 2005, Kraft said.
“We’re continuing to sharpen our focus on core categories that enable us to benefit from our scale and maintain sustainable competitive advantage,” said Dave Johnson, president, Kraft North America Commercial. “Milk-Bone is a great brand, but has very different retail channel dynamics than other Kraft brands. With the sale of Milk-Bone, we’re better able to focus our time and resources on opportunities that provide us with greater potential for long-term growth.”
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The sale includes the company’s Milk-Bone manufacturing facility in Buffalo, New York, and the Sherburne Pet Food Testing Centre in Sherburne, New York. As part of the transaction, approximately 230 Kraft employees, including the East Hanover, New Jersey business team, the operations team at the Buffalo facility and technicians at the Sherburne Center, will join Del Monte.
“We are grateful to our employees for their commitment and dedication to the Milk-Bone brand, and wish them continued success in the future,” said Johnson.
This transaction is subject to regulatory approval and will close shortly after it has been received. With this agreement, Kraft will recognise an asset impairment charge of approximately $0.04 per share in the first quarter and will incur an additional tax expense of approximately $0.03 per share upon closing, for a total 2006 impact of $0.07 per share. Ongoing dilution is expected to be $0.02 per share.
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