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Danone selling biscuits division to Kraft

Danone selling biscuits division to Kraft
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The head of French food group Danone, Franck Riboud, and Irene Rosenfeld, his counterpart from US rival Kraft Foods, were all smiles at a news conference in Paris to announce that Kraft is set to buy Danone’s biscuit and cereals business. Danone consulted with its Works Council, as it must do under French law, before entering into a definitive agreement.

As he left the meeting, trade union representative Marcel Izorche was angry. He told reporters: “It’s a shame, we’re giving everything to the Americans and then I think they’ll lay people off as usual.” Izorche added sarcastically: “All this to give bigger and bigger profits to the poor shareholders to make them happier.”

Last year Danone’s biscuit division had sales of two billion euros – 16% of the total group’s sales. It has 36 factories employing 15,000 people. Danone’s stakes in biscuit businesses in Latin America and India are not included in this sale. To minimise French opposition, Kraft has promised to keep the Paris headquarters and not to close any French manufacturing facilities for at least three years.

Danone plans now to concentrate on its dairy products and beverages divisions. Analyst said it will probably use the 3.5 billion euros its getting to expand, possibly buying Russian consumer foods group Wimm-Bill-Dann in which it already has a stake, or the rest of its joint venture with China’s Wahaha.