The rumours are confirmed. Less than a year after it acquired United Biscuits’ Iberian operations (recovering the use of Nabisco brands across Europe, the Middle East and Africa in the process), Kraft is now planning to buy Danone’s biscuits and cereal products division for €5.3 billion.
For Kraft, whose Nabisco (formerly the National Biscuit Company) is home to many biscuit and cracker brands well known in North America, the acquisition of Danone’s brands such as LU, Prince, Tuc will go a long way to improving Kraft’s standing in the biscuit market outside North America, particularly in emerging markets such has Eastern Europe and Asia, as well as increasing its diversification in the snacks sector.
- It was noted that Kraft’s offer provides for the continued existence of the current entity managing Danone’s European biscuit business out of France, with the current General Manager, Georges Casala, at its head; and furthermore it states the intent to not close any factories for at least three years following signature.
- It seems that union leaders hope to block the sale by raising nationalistic concerns and obtaining government intervention. However French Prime Minister François Fillon commented that he sees no issue with the planned transaction, particularly given the nature of the business involved, and the terms and guarantees offered by Kraft: “we are not talking about a strategic sector and there is no threat to employment.”
Meanwhile, for Danone this confirms a strategy of focus on the two core businesses of dairy products and bottled water, following market momentum and targeting the increasingly-health-conscious consumer. What began with the 2004 sale of Jacob’s is now brought to its logical conclusion, a total withdrawal from the biscuit market.
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