Kraft Foods Inc will look for more ways to expand its international reach after announcing plans to buy Danone's biscuit business, the company's top executive said on Tuesday. Chairman and Chief Executive Irene Rosenfeld also said that the acquisition should add to earnings from the start.
In an interview, Rosenfeld declined to comment on whether she had spoken with Nelson Peltz, who according to a source has acquired a 3 percent stake in Kraft Foods. Peltz's Trian Fund wants Kraft to jettison unsuccessful brands and find better uses for its cash, a source said in late June.
"I'm not going to comment on any conversations that I might have with any current or potential investors," Rosenfeld replied when asked about Peltz. Kraft said on Tuesday it planned to buy Danone's biscuit business for 5.3 billion euros ($7.2 billion) in cash. Rosenfeld said that the Danone biscuit business, with brands such as LU and Tuc, "is a great fit for Kraft and it will help to accelerate our growth."
Kraft, the largest North American food maker, is known for products including Oreo and Chips Ahoy cookies. The company has been looking for ways to reignite growth and while much of that work has been internal, more acquisitions may be considered.
"We will continue to look for opportunities that are strategically compelling, that are attractive financially and that are enhancing to shareholder value and I've been clear that our main focus in that regard will be in international markets," Rosenfeld said.
The acquisition of Danone's biscuit unit would bring the percentage of Kraft's total revenue from international markets up to close to 40 percent from about 33 percent currently. "We will continue to look for opportunities to further expand that percentage," Rosenfeld told Reuters.
Rosenfeld said the Danone deal should immediately add to Kraft's earnings per share, adding about 1 cent per share to profit in the first year and build over time after that.
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