Wrigley to Buy Kraft Candies

The world’s 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 Monday that it had agreed to buy Life Savers and Altoids from Kraft Foods Inc. in a $1.48-billion cash deal that refocused 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 U.S., 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 and Cadbury Schweppes 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., chairman and chief executive of Chicago-based Wrigley. “Altoids and Life Savers are two such brands.”

For Kraft, the sale offloads brands that produced just 1.6% of its $31 billion in revenue last year, along with $85 million in profit.

Kraft decided recently to shed most of its confection brands, admitting that candy was one of four categories being “hammered” because of competitors’ products and the effect of low-carb diets.

Wrigley said the price paid would be partially offset by about $300 million in cash tax benefits associated with amortization of intangible assets. The net acquisition cost of $1.18 billion represents 2.4 times estimated 2004 sales.

Shares of Kraft fell 20 cents to $34.68 on the New York Stock Exchange, still near two-year highs. Wrigley shares, which have risen 21% this year through a series of all-time highs, gained 72 cents to $68.08.