Federal regulators approve Philip Morris-Nabisco deal
December 7, 2000
WASHINGTON (AP) Federal regulators conditionally approved on Thursday the $14.9 billion purchase of Nabisco Holdings Corp. by Philip Morris Cos. Inc., which would create the world’s largest food company.
The combined company would have such brands as Oreo cookies, Ritz crackers, Velveeta cheese, Kool-Aid and Jell-O.
To resolve Federal Trade Commission competitive misgivings about the merger, Philip Morris agreed to sell Nabisco’s U.S. dry-packaged dessert and baking powder businesses to The Jel Sert Co. and its intense mints operation to Hershey Foods Corp.
”By requiring divestitures in these markets, the commission will ensure consumers continue to enjoy these products at palatable prices,” said Richard Parker, director of the FTC’s competition bureau.
Philip Morris, the world’s largest tobacco company and parent of Kraft Foods, is offering to acquire Nabisco Holdings for $55 a share plus the assumption of $4 billion in debt. The combined companies would have more than $100 billion in annual food sales.
The purchase fills a gap in Philip Morris’ food portfolio, which had not included cookies and crackers.
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”Nabisco provides us with brands in new growth categories where they are a leader, such as cookies and crackers,” Philip Morris Chairman and Chief Executive Geoffrey Bible said in a statement.
Philip Morris did not announce details of the integration of Kraft and Nabisco. It plans an initial public offering next year of less than 20 percent of the stock in the newly combined food company. Proceeds will retire some of the debt incurred in the Nabisco purchase.
Philip Morris has about a 90 percent share of the dry-mix gelatin dessert, dry-mix pudding and dry-mix dessert markets through Kraft’s Jell-O brands. Nabisco’s Royal brands account for about 6 percent.
Philip Morris also will shed Nabisco’s Davis and Fleischmann’s brands of baking powder, which has a 17 percent share of the market. Philip Morris’ Calumet brand accounts for 27 percent of sales.