Kraft Foods Inc. has made a binding offer to acquire the global biscuit business of Groupe Danone for  €5.3 billion. Both companies anticipate that the transaction will close by the end of the year. During 2006, the biscuit businesses to be acquired generated revenues of €2 billion. The Busicuit and Cereal division is the smallest and slowest-growing of the three Danone arms, the other two being Fresh Dairy Products and Beverages.

The planned acquisition encompasses Danone's market-leading biscuit brands (among them, LU, Tuc and Prince) and operations and assets in 20 countries, including 36 manufacturing facilities. The transaction does not include Danone's joint ventures in Latin America and India.
The European headquarters of the biscuit business will remain in the greater Paris metropolitan area for the foreseeable future. Kraft does not intend to close any of the Danone biscuit manufacturing facilities in France for at least three years after the agreement is signed.

Once the transaction closes, Georges Casala, who currently runs Danone's biscuit business, will join Kraft, as will key members of his team. Casala will report to Sanjay Khosla, President of Kraft International, and will manage the company's entire EU biscuit business, including Kraft's recently acquired Iberian biscuit brands and operations.

With the acquisition, Kraft will gain broader operating scale and additional reach across the globe. This includes critical emerging markets such as China, Russia, Poland, Indonesia and Malaysia, that account for over 25% of the business. For example, Kraft will double the size of its business in China and gain entry into the biscuit category in Eastern Europe, notably in Russia, where Danone is the share leader.