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In announcing the regulatory approval, Philip Morris also said Nabisco's North American assets will be integrated into Kraft Foods North America, based in Northfield, Ill., and that Betsy Holden, president and chief executive of the Kraft unit, will lead the process. Nabisco's international brands will be folded into Kraft Foods International, under the direction of Roger K. Deromedi, president and chief executive of that division, which is based in Rye Brook, N.Y.
Philip Morris agreed in June to purchase Nabisco's food operating unit for $14.91 billion. The combined food company will have revenue of about $35 billion.
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The Federal Trade Commission on Thursday conditionally approved the sale of the Nabisco Holdings Corp. to Philip Morris Cos. Inc. The companies must sell off five products -- Royal Brand gelatin desert mix, Royal Brand dry mix pudding, Royal Brand no-bale bake desert and Davis and Fleischmann's baking powder and Icebreaker Mints.
Nabisco Holdings, a unit of Nabisco Group Holdings, makes Oreo cookies, Ritz crackers, Lifesavers candies and Gray Poupon mustard.
Nabisco Group Holdings Corp. on Friday said its shareholders approved the sale of its Nabisco Holdings Corp. unit, which makes Oreo cookies and Grey Poupon mustard, to food and tobacco giant Philip Morris Cos. for $55 a share.
Nabisco Group Holdings owns 80.6 percent of Nabisco Holdings, the No. 1 U.S. cookie and cracker maker. Philip Morris agreed to buy it in June.
Philip Morris will create a snack and food behemoth by combining Nabisco with it Kraft Foods unit, helping Philip Morris remain the world's second-largest food company, after Swiss giant Nestle SA .
Philip Morris plans an initial public offering for less than 20 percent of the combined food operations after the deal closes.
The stockholders also approved the subsequent acquisition of parent Nabisco Group Holdings by R.J. Reynolds Tobacco Holdings Inc. for $30 a share. The primary asset of Nabisco Group Holdings after the sale of the Nabisco foods company will be about $11.8 billion in cash.
The European Commission on Tuesday cleared plans by Philip Morris Companies Inc. to acquire Nabisco Holdings Corp. in a $14.91 billion cash deal that will create one of the world's biggest consumer foods groups.
Announcing its decision Tuesday, the commission said the impact in Europe will be limited to chocolate confectionery in the Netherlands. It wasn't immediately clear whether the companies would have to shed some units as a result.
"There is sufficient competition from other multinational companies, local manufacturers and retailer brands,'' the commission said in a statement. . .
Once the Nabisco sale to Philip Morris is completed, R.J. Reynolds Tobacco Holdings Inc., based in Winston-Salem, N.C., will pay $30 a share, or $9.8 billion, to acquire Nabisco Group Holdings.
The holding company's sole asset is its 80.6% ownership of the food company, so it will become a cash-filled shell of $11.7 billion. Acquiring the holding company will give Reynolds, which was spun off last year by the holding company, $1.4 billion to $1.5 billion in cash, after liabilities, thereby bolstering the tobacco company's balance sheet.
With the Nabisco purchase, Philip Morris's Kraft unit will be able to retain its position as second-largest food company in the world, behind Nestle SA.
Philip Morris Cos. said it got a $9 billion credit line to help finance its $18.9 billion acquisition of Nabisco Holdings Corp.
Chase Manhattan Corp. and Credit Suisse First Boston committed to provide the line, which is not expected to be used by Philip Morris. Instead, the line will act as a backup in case the world's largest tobacco company is unable to issue commercial paper to pay for its cash purchase of Nabisco, according to a spokesman for the company.
The complex transaction by which Philip Morris, the nation's largest cigarette company, will buy Nabisco -- a company that used to be part of a company that owned Reynolds, the No. 2 cigarette maker -- is a monument to the fear that class-action suits will drive the tobacco companies into bankruptcy.
That is the part of this arrangement that gives the deal its most unusual aspect: the gift of $1.4 billion to $1.5 billion in cash to R. J. Reynolds. That reflects the possibility that Nabisco Group Holdings, as the former corporate parent of Reynolds, may have a residual liability for Reynolds debts if Reynolds is driven into bankruptcy by tobacco litigation. . .
Now Philip Morris will own a huge food company, composed of its old Kraft and its new Nabisco units. It plans to sell a minority stake in that to the public. When that happens, it will become clear that Philip Morris, like RJR Nabisco before it, is worth less than the sum of its parts. Then, Wall Street will start talking about how to realize the value of that food operation.
Philip Morris Cos. Inc. is paying $14.9 billion in cash for the nation's biggest cookie and cracker maker at the same time its domestic tobacco subsidiary faces the possibility of a multibillion-dollar penalty in a class-action suit in Florida. . .
In Miami, where a jury is deciding what if any penalty tobacco companies will pay in a class-action lawsuit over health claims, smokers' attorney Stanley Rosenblatt said Monday that the purchases show cigarette makers are "loaded with money'' even as they argue they cannot afford a punitive damage award in the tens of billions of dollars. . .
"The tobacco litigation has nothing to do with the acquisition today,'' Bible told a news conference Monday in New York. In a subsequent interview, he said "I don' t think it is at all relevant because the suit down there is with our domestic cigarette company and that's what they (the Florida jurors) have to focus on in their deliberations.''
The tobacco litigation has nothing to do with the [Nabisco] acquisition today. . . I don't think it is at all relevant because the suit down there is with our domestic cigarette company and that's what they [the Engle jurors] have to focus on in their deliberations.Geoffrey C. Bible, chairman and CEO of Philip Morris. Wollenberg, S., <I>Decision in tobacco suit looms as Philip Morris acquires Nabisco</I>
The announcement comes at a time when many of the largest players in the slow-growing food business have been looking to consolidate in order to cut costs, boost sales and increase their clout with grocery retailers. At the same time, Philip Morris, the world's biggest tobacco company, signaled that the deal will help lift the cloud of smoking-related lawsuits that has been a drag on its food business. . .
Analysts say the planned stock sale sets the stage for Philip Morris to completely separate its food concern from its tobacco business, which is facing billions of dollars in legal settlements and other lawsuits that are pending. A spinoff would free the highly profitable Kraft from the depressing effects of ongoing anti-tobacco litigation and regulation.
Philip Morris Cos. agreed to buy Nabisco Holdings Corp. for $18.9 billion, adding Oreo cookies and Ritz crackers to its Kraft Foods business. The company will then sell shares in Kraft to the public.
Philip Morris will pay $55 a share in cash for Nabisco, its biggest purchase since the takeover of Kraft in 1987, and assume $4 billion in debt. Philip Morris plans to sell less than 20 percent of Kraft in the initial public offering. . .
The purchase will make Philip Morris less reliant on tobacco. Its stock fell 43 percent in the past year as the company faced smoking-related legal challenges, including the first class-action suit ever to go to trial. . .
The company expects to sell shares in Kraft early next year and use proceeds to pay part of Nabisco Holdings's debt.
``What (the initial public offering) does is underscore the true value of Kraft,'' said Philip Morris Chairman and Chief Executive Geoffrey Bible. ``This will create the most profitable and efficient food business in the world, and people will be able to focus on it independent'' of the tobacco business.
What [the proposed Kraft IPO] does is underscore the true value of Kraft. . .This will create the most profitable and efficient food business in the world, and people will be able to focus on it independent [of the tobacco business].Philip Morris Chairman and Chief Executive Geoffrey Bible. Edwards, W. <I>Philip Morris, R.J. Reynolds to Buy Nabisco Units (Update5)</I>
Cold, hard cash is what R.J. Reynolds Tobacco Holdings Inc. stands to gain in buying Nabisco Group Holdings Corp.
As a result of the deal, RJR emerged from the weekend $1.5 billion richer, which will certainly help the company's standing on Wall Street . . .
Analysts attributed Nabisco Group Holdings' sluggish performance to its ''tobacco taint,'' scaring off investors who feared the ever-increasing avalanche of cigarette litigation.
Unable to shake this taint, Nabisco executives began pondering an alliance with the tobacco giants, Philip Morris and R.J. Reynolds, which are well-armed for litigation.
Steven Goldstone, the chairman of Nabisco Group Holdings, initiated the deal and worked on the RJR purchase, Feldman said.
RJR has been working on buying Nabisco Group, essentially a cash shell for the operating company Nabisco, for four or five months, Feldman said.
The nation's largest cigarette maker, Philip Morris Cos., yesterday agreed to acquire Nabisco Holdings Corp. for $18.9 billion and plans to combine it with its Kraft Foods Inc. to create a huge and profitable food company to help offset its tobacco liabilities. . .
The merger creates a gigantic food company that combines such dominant Nabisco brands as Oreo cookies, Ritz crackers, Planters nuts and Life Savers candies with the Philip Morris brands of Kraft, Jell-O, Maxwell House and Oscar Mayer. More than 90 percent of Nabisco's U.S. brands are leaders in their respective categories.
Based on 1999 financial figures, the combined Philip Morris and Nabisco companies would have had revenue of $86.6 billion and operating income of $16.3 billion. Kraft and Nabisco would have had combined revenue of $34.9 billion and operating income of $5.5 billion in 1999.
In a transaction that will create the world's most profitable food company, Philip Morris, the parent of Kraft Foods, announced yesterday that it would buy Nabisco Holdings, the food company that makes and markets Oreo cookies, Ritz Crackers and other classic American packaged foods, for $14.9 billion.
In addition, Nabisco Group Holdings, the parent of Nabisco Holdings, said that once it completes the sale of its food business to Philip Morris, it has agreed to be acquired by the R. J. Reynolds Tobacco Company for $9.8 billion. Nabisco spun off R. J. Reynolds, the tobacco company, and other assets about a year ago. The pending deal means R. J. Reynolds will assume any liability from tobacco lawsuits that Nabisco Group might have had. . .
"Scale gives you great capability," Mr. Bible said in an interview yesterday. "It allows you to be more efficient with retailers, and provides a greater capability to bring new products to market. The bigger you are, the better you are at delivering what the customer and the consumer wants." . .
Despite the scope of a combination that will unite Nabisco with Kraft Foods, Philip Morris's food subsidiary, analysts said there was little likelihood that the deal would create much of a stir with federal regulators because the food industry remains relatively fragmented. . .
Still, there is no question that the new company, which will keep the name Kraft Foods, will be big. Added together, Kraft and Nabisco had revenue in 1999 of $34.9 billion, and operating profits of $5.5 billion.
Philip Morris Companies Inc. today announced that it entered into definitive agreements with Nabisco Group Holdings and Nabisco Holdings Corp. to acquire all outstanding shares of Nabisco Holdings Corp. for $55.00 per share in cash. The transaction reflects an enterprise value of $18.9 billion, which includes the assumption of approximately $4.0 billion in net debt.
Philip Morris expects the transaction to be immediately accretive to its cash earnings per share and accretive to reported earnings per share as of 2002. The transaction is expected to be completed by October 2000.
Philip Morris Cos., in a purchase that will dramatically bolster its food business and have far-reaching consequences for the broader industry, has clinched a deal to acquire Nabisco Holdings Corp. for $55 a share, or $14.91 billion in cash, plus the assumption of about $4 billion in debt, people familiar with the matter said.
Nabisco's board met early Sunday afternoon and approved the transaction, these people said. A few last-minute details need to be wrapped up before a deal is announced later this afternoon.
Philip Morris Cos. agreed to buy Nabisco Holdings Corp. for $18.9 billion in cash and debt, while R.J. Reynolds Tobacco Holdings Inc. will buy its former parent, Nabisco Group Holdings Corp., for $9.8 billion.
Philip Morris would pay $55 a share in cash, or 6.5 percent more than Nabisco Holdings' closing stock price of 51 5/8 on Friday. The company would also assume $4 billion in Nabisco Holdings debt in the acquisition, Philip Morris' largest ever.
Nabisco Holdings will be folded into Philip Morris' Kraft foods unit. Shares of the new business will be sold to the public, and the proceeds will be used to help pay off debt from the purchase.
R.J. Reynolds, which was spun off from Nabisco Group last June, would pay $30 a share, or 18 percent more than Nabisco Group's closing price of 25 7/16.