Monsanto Agrees to Buy De Ruiter for $863 Million

Monsanto Co. agreed to acquire the Netherlands' De Ruiter Seeds Group BV for €546 million, or $863 million, in a deal expected to build on the agriculture giant's vegetable-seed business.

The deal is intended to enhance Monsanto's growth in the protected-culture segment, where seeds are germinated in controlled settings like greenhouses. Monsanto called it "the fastest-growing space within the vegetable seeds industry."

Chief Financial Officer Terry Crews said the deal -- which Monsanto intends to finance with cash -- is expected to add to Monsanto's results by the second-full fiscal year following the closing, for which no timeframe was announced. De Ruiter, which had 2007 sales of €108 million, is expected to help make Monsanto's vegetable-seed operations into a $1 billion business by 2012.

"This acquisition represents an opportunity to not only transform, but further grow our vegetable seed business in a high-value, fast-growing segment of the market," Mr. Crews said in a prepared statement.

De Ruiter Seeds President and Chief Executive Biense Visser will run that business, which will encompass all of Monsanto's protected-culture operations in the vegetable-seed space. De Ruiter works with crops such as tomatoes, cucumbers and peppers, and focuses on breeding novel varieties for the protected-culture segment.

The announcement came just one week after Monsanto boosted its fiscal 2008 earnings guidance for the third time in as many months, citing seed sales and gains made by its herbicide business. The St. Louis company will release its fiscal second-quarter results Wednesday.

Del Pharmaceuticals’ net sales in the fiscal year ended December 31, 2007 were approximately $100 million. Over three quarters of those sales were from the Orajel® brand, the premium-priced #1 brand in the fast-growing oral analgesic category, with remaining sales from a variety of other OTC brands.

Church & Dwight's 2007 net sales of $2.2 billion include a premium oral care business led by the Arm & Hammer toothpaste and SpinBrush brands. Adding the Orajel brand will immediately increase the gross margin for the Company and will complement the strategy of building scale in core categories. The brand will be integrated into the Company’s existing oral care business.

"Orajel is a great addition to our existing portfolio and provides access to a fast-growing segment of the attractive premium oral care category," said James R. Craigie, Chairman and Chief Executive Officer. "Orajel also brings to our company a powerful franchise that has developed great consumer loyalty. This transaction is consistent with our growth strategy of strengthening our businesses by adding #1 or #2 brands in areas of high growth potential with gross margins that are accretive to the overall Company," Craigie added.

“It was important for Coty to identify the most suitable purchaser who will provide the best opportunity to grow this portfolio,” said Bernd Beetz, CEO of Coty Inc. “While these pharmaceutical brands are highly respected, we remain focused on building and strengthening our core beauty business comprised of fragrance, color cosmetics, skin care and toiletries.”

The Orajel brand has been in the market for over 40 years and has strong brand equity in a growing area of premium oral care. The brand is well known for aiding consumers with toothaches and baby teething as well as a growing toddler’s toothpaste business, the Company said.

The Del Pharmaceuticals business includes 2007 EBITDA of approximately $28 million. Church & Dwight expects to combine operations which will result in additional cost synergies of over $10 million a year by the end of 2009. The Orajel products are expected to be integrated into existing Church & Dwight manufacturing facilities by the end of 2009.

The transaction is structured as an asset purchase resulting in a cash tax benefit from intangibles amortization with a net present value of $90 million.

The Company will finance the acquisition with an addition to its bank credit facility combined with available cash and existing lines of credit.

The acquisition is expected to have a neutral impact on 2008 earnings per share due primarily to one-time integration costs and the step-up of inventory. "We expect it to be accretive in 2009 and contribute meaningfully to earnings and free cash flow. We also remain comfortable with our previously announced objective of achieving $2.77 in earnings per share for 2008, including any impact from the acquisition," Mr. Craigie concluded.

Church & Dwight Co., Inc. manufactures and markets a wide range of personal care, household and specialty products under the Arm & Hammer brand name and other well-known trademarks.

Coty Inc. is the world’s largest fragrance company and a recognized leader in global beauty with annual net sales of $3.5 billion to consumers in 91 markets worldwide.

Sara Lee may pick up Wonder, Hostess brands

The demise of Wonder Bread could be a boon for Sara Lee.

Sara Lee Corp. CEO Brenda Barnes is hunting for acquisitions, and Interstate Bakeries Corp., the maker of Wonder, as well as Hostess cupcakes and Twinkies, could be a fix for her sagging bread business.

Since Ms. Barnes said last month she is ready to do deals, industry analysts have zeroed in on potential targets: Oscar Mayer meats, Folgers coffee and Interstate's bread and snack-cake brands. Interstate, which is trying to reorganize in Bankruptcy Court, appears the most plausible near-term option because of its availability and strategic fit with Sara Lee. The company is seeking a buyer for all or parts of its business.

Ms. Barnes could buy bakeries from St. Louis-based Interstate to better distribute Sara Lee brands across the country. Such a deal would help create a bread company with national reach, giving it more scale in a business with dozens of regional rivals. Boosting bread sales is important because the money-losing division has been a drag on Ms. Barnes' turnaround plan for the company.

"They will look to expand their bread business because they have talked about trying to make Sara Lee a national bread brand," says Colin Symons, chief investment officer with Pittsburgh-based Symons Capital Management Inc., which owns around 400,000 Sara Lee shares.

Alexia Howard, an analyst in New York with Sanford C. Bernstein Research, says Ms. Barnes probably will take a close look at Interstate because she could gain bakeries in the Northeast, where Sara Lee has no bread sales.

"Sara Lee needs to fill in its hole in the Northeast to be a credible national player," Ms. Howard says.

Ms. Barnes won't comment on specific targets, but says any acquisition would have to fit within Sara Lee's U.S. bread and meat businesses or its overseas coffee, household and body care lines.

Oscar Mayer would be a good pairing with Sara Lee's Jimmy Dean, Hillshire Farm and Ball Park brands, but Oscar Mayer's parent, Northfield-based Kraft Foods Inc., doesn't appear to be selling. Procter & Gamble Co.'s Folgers is for sale but may make more sense for a company focused on the U.S. coffee market, analysts say.

Pernod Ricard Wins Auction for Vin & Sprit

 

Pernod Ricard SA has won an auction to acquire Sweden's Vin & Sprit AB, with the global drinks giant beating out Fortune Brands Inc. of the U.S. to become the owner of the prized Absolut vodka brand, people familiar with the matter said.

The details of the winning bid weren't immediately clear, but V&S, which is owned by the Swedish government, was expected to fetch as much as $7 billion. The results of the auction were set to be announced Monday morning, the people said, four days after final bids were due.

A spokesman for V&S declined to comment. Representatives for Fortune and Pernod also declined to comment.

Two other bidders -- Bacardi Ltd. and a group comprising Swedish investment firms EQT Partners AB and Investor AB -- also were vying for V&S, in an auction that began with a first round of bids in January.

Absolut is the world's third-largest premium liquor in terms of volume, after London-based DiageoPLC's Smirnoff vodka and Bacardi rum.

The V&S sale is being closely watched for signs that big deals still can get done after turmoil in the global financial markets caused a sharp slowdown in merger-and-acquisition activity.

A successful sale will continue a wave of global consolidation in the liquor industry. In the past several years, Grey Goose vodka was sold to Bacardi, LVMH Moët Hennessy Louis Vuitton SA bought Glenmorangie Scotch, and Pernod Ricard bought Allied Domecq and a chunk of the Seagram's drinks empire.

Pernod Ricard's experience in integrating acquisitions was one of the French company's selling points to V&S. It also has a global distribution network that could be combined with V&S's to create cost savings.

Deerfield, Ill.-based Fortune Brands, which also makes construction products, has been hurt by the downturn in the U.S. housing market, which has pushed down the company's stock by nearly 20% and might have hurt its ability to bid more.

Fortune, which had teamed up with private-equity firm Nordic Capital, had been regarded as the bidder to beat because it already distributes Absolut in the U.S. and is part of a joint venture with V&S to distribute the liquor outside the U.S. Anyone else buying Absolut will have to pay a penalty to break the distribution agreements, which analysts estimate could cost as much as €300 million ($473 million).

Unilever North Africa and Middle East appoints new chairman

Unilever North Africa and Middle East has appointed Sanjiv Mehta as the new chairman, effective March 2008.

Mr Mehta takes over from Jan Zijderveld, who is going to move to a new position in the company. Mr Zijderveld will now serve as group vice president, south-east Asia and Australasia.

Mr Mehta previously served as chairman of Unilever Philippines. He has been with Unilever for the past 15 years, and has extensive international experience of which six years have been in the Middle East.

ConAgra Sells Trading Group for $2.1 Billion

ConAgra Foods, Inc. announced Thursday that it planned to sell its commodities trading group to the Ospraie Special Opportunities fund for $2.1 billion in cash and stock.

 

The chief executive of ConAgra, Gary M. Rodkin, said he had decided to sell the trading group so the company could focus on its core consumer foods business and to take advantage of the current commodities market. He said most of the proceeds will be used to repurchase ConAgra stock.

 

“The deal is the right strategic step for us,” Mr. Rodkin said, “and the timing underscores our confidence in our core food businesses.”

 

ConAgra’s trading and merchandising group has increased the company’s profits and helped make up for disappointing sales of its consumer products, which also include Banquet, Orville Redenbacher and Egg Beaters. ConAgra’s trading and merchandising group buys and sells agricultural commodities, fertilizer and energy.

 

After the sale, which is expected to close within 60 days, the trading group will be renamed Gavilon. Nearly all 950 employees of the trading group will become part of the new company.

 

ConAgra will receive $1.6 billion in cash and $525 million in stock in the new Gavilon company as part of the sale. But the value of the deal could change based upon the book value of the trading group’s assets.

 

ConAgra will finance $525 million of the deal by accepting debt securities from Ospraie.

Mr. Rodkin said the sale of the trading group will not affect ConAgra’s long-term forecast of 8 to 10 percent growth in annual earnings per share.

 

The company also said that its third-quarter profit soared 60 percent as it raised prices and improved sales, beating Wall Street estimates, and increased its financial outlook for the full year.

 

ConAgra’s shares jumped $1.36, to $23.25 in morning trading.

In the third quarter ended Feb. 24, ConAgra reported net income of $309.1 million, or 63 cents per share. That’s up from $192.6 million, or 38 cents per share, a year ago when results were depressed by a recall of its Peter Pan peanut butter.

 

Revenue rose to $3.53 billion, up from $2.9 billion a year ago.

 

Analysts polled by Thomson Financial expect earnings of 39 cents a share on revenue of $3.17 billion.

 

Sales in the quarter grew for both ConAgra’s food and ingredients division and its consumer foods division. And the trading group again helped profits.

 

The food and ingredients division reported a 24 percent jump in sales to $1 billion in the quarter. That unit, which sells specialty potato, flour and flavor products, also recorded a $144 million pretax profit.

 

The trading group added $199 million to ConAgra’s pretax profits, which is more than three times higher than the $62 million pretax profit it delivered a year ago. The trading group was able to take advantage of soaring commodity prices, especially for wheat, during the quarter.

 

ConAgra’s consumer foods segment, which accounts for half its sales, delivered mixed results. Sales of those products grew, but pretax profits fell as costs continued to rise.

The company reported an 8 percent jump in sales of its consumer foods over last year’s third quarter. But last year’s third quarter was affected by the peanut butter recall, and ConAgra has made some small acquisitions since then. Excluding those unusual items, ConAgra said sales were up 6 percent.

Pilgrim's Pride Taps Wright as COO

Pilgrim’s Pride Corp. named Robert A. Wright chief operating officer as new Chief Executive J. Clinton Rivers puts his leadership team in place.

Mr. Wright succeeds Mr. Rivers, who was named president and chief executive on March 5. Mr. Wright had served as executive vice president of sales and marketing for the Pittsburg, Texas, poultry processor since June 2004. He joined the company in October 2003.

The company also announced an organizational realignment, in which four senior division vice presidents will report to Mr. Wright. His former position as executive vice president of sales and marketing has been eliminated under the new alignment.

Pilgrim's Pride also promoted Shane Butler to senior vice president for prepared foods. He was previously senior vice president for prepared foods, regional operations.

P&G Buys Luxury Hair-Care Brand

Expanding its reach into high-end beauty products, Procter & Gamble Co. signed an agreement to purchase the luxury hair-care brand Frédéric Fekkai & Co. from the private-equity firm Catterton Partners.

Terms weren't announced, but the deal was valued at slightly more than $400 million, according to people familiar with the matter.

For P&G, the Cincinnati-based maker of leading household brands such as Tide detergent, Crest toothpaste and Gillette razors, the acquisition marks its latest foray into the luxury sphere.

The consumer-products giant has taken steps to expand in the broader beauty market because it sees more opportunities for growth than in its traditional businesses of household staples.

Fekkai will join P&G's other high-end beauty brands such as the skin-care line SK-II and its growing cadre of fine fragrances, including licensing relationships with the Hugo Boss, Valentino and Lacoste brands.

The Fekkai purchase includes the brand's six luxury salons in the U.S. Founder and celebrity hairstylist Frédéric Fekkai is expected to remain involved in the business and in product development. Catterton invested in the business in 2005.

Hair-care products are among the fastest-growing segment of the high-end beauty market. Mr. Fekkai is widely credited as a pioneer of the category, and his shampoos, conditioners and styling products remain leading sellers. And, unlike high-end makeup, skin care or fine fragrances -- which typically require a staff of consultants at retail counters to help shoppers select the right products -- hair care is usually self-service.

"What's beautiful is that you don't need to pay for help behind the counter to push it," says Joyce Greenberg, managing director of Financo Inc. "You get the traditionally high beauty margins without [the] operating expenses of payroll."

For a luxury product -- a seven-ounce bottle of Fekkai shampoo can fetch $35 -- the brand has relatively wide distribution. In addition to tony retailers such as Saks Inc.'s Saks Fifth Avenue and Neiman Marcus Inc., Fekkai is also available in specialty chains, such as Sephora, owned by LVMH Moët Hennessy SA, and Limited Inc.'s Bath and Body Works.

"We see an opportunity to learn from and build this unique business model," Craig Bahner, P&G's vice president and general manager for North America hair care, said in a statement.

Hair care is one of P&G's biggest businesses in mass-market stores, including megabrands such as Head & Shoulders and Pantene as well as Herbal Essences and Aussie. So far, P&G has been mum on whether it will consider introducing Fekkai in discount retailers such as Target Corp. or Wal-Mart Stores Inc. "Right now, we're building our presence in prestige -- it's an important channel for us," says P&G spokeswoman Francine Gingras.

Despite P&G Chief Executive A.G. Lafley's emphasis on building the company's beauty-products business, the $23 billion division so far hasn't met many analysts' expectations. Its sales growth has often been outpaced by P&G's other business divisions, such as fabric and home care.

That a beauty acquisition got done despite the weakening credit markets doesn't surprise some, since consumers usually continue to buy grooming products while tightening budgets. "We're all vain -- that doesn't change," says Bob Phillips, a senior adviser with investment firm Peter J. Solomon Co. in New York.

Cott Replaces Chief Willis With Director Gibbons

Cott Corp., the world's biggest maker of store-brand soft drinks, replaced Chief Executive Officer Brent Willis with Director David Gibbons after Willis failed to turn the company around, sending the shares up the most in 17 years.

The board named Gibbons interim CEO immediately while it looks for a permanent replacement for Willis, who was hired in May 2006, the Toronto-based company said in a statement. Willis, 47, and the board reached a ``mutual decision'' yesterday that he step down, Cott spokeswoman Lucia Ross said by phone today.

Cott posted a loss in 6 of the past 10 quarters as it faced higher expenses and a decline in soda consumption in North America. The soda maker said last month that Wal-Mart Stores Inc., its biggest customer accounting for 39 percent of sales last year, may reduce shelf space for its Sam's Choice soft drinks, which are made by Cott.

``They hitched their wagon to the Wal-Mart horse,'' said Greg Eckel, who helps manage about $1.3 billion in assets at Morgan Meighen & Associates in Toronto. ``That was playing out, but now it looks like it's turning on them. It's such a big part of them.''

Cott gained 49 cents, or 26 percent, to C$2.34 by 4:10 p.m. on the Toronto Stock Exchange, the biggest jump since March 1991. The shares have dropped 64 percent this year, after falling 61 percent in 2007, the fourth consecutive annual decline. Cott was the worst performer on the Toronto Stock Exchange's benchmark index last year.

Price Increases

Willis raised prices in the past year to try to compensate for higher costs for aluminum cans, plastic bottles and corn- based sweetener.

``Given Cott's recent financial performance, we do not believe the change will be seen as a surprise,'' David Hartley, an analyst with BMO Capital Markets, said in a note to clients. Willis's departure is ``potentially positive,'' he said. Hartley rates Cott shares ``underperform.''

Gibbons said in the statement that he will continue efforts introduced by Willis to develop new products such as teas, energy drinks and water as North American consumption of soda pop declines, while ``redoubling'' efforts to work with retailers to sell their beverages.

Before joining Cott, Willis was an executive with InBev NV, the world's biggest brewer, where he was credited with increasing sales and turning around ``numerous markets,'' Cott said when he was hired. He replaced John Sheppard, a former Coca-Cola Co. executive who served as Cott's chief for 20 months.

Higher Costs

``No one has lasted long,'' Eckel said. ``I don't hold out much hope their prospects will turn around anytime soon. Rising costs will continue. Anything that goes into food has gone up like crazy.'' Morgan Meighen sold its Cott shares ``several years'' ago, he said.

Crude oil prices have gained more than 60 percent in the past year, pushing up the price of resin to make plastic bottles. Corn futures climbed 24 percent during that period, driving up the price of syrup used to sweeten soft drinks.

Cott said last month that shipments of soda in North America dropped 4.8 percent in the fourth quarter.

Ross declined to comment on severance payments for Willis. Under his contract, he was to receive two years' salary if he was fired or quits, plus any shares to which he was entitled under the company's bonus program, Cott said in a regulatory filing in March last year. Willis's annual salary was $700,000.

Gibbons, who was appointed to the board in March 2007, was CEO of drugmaker Perrigo Co. from 2000 to 2006, Cott said.

Pepsi to buy into Russian juice maker for $1.4 billion

PepsiCo Inc and its largest bottler agreed to buy a majority stake in Russia's leading juice producer in another step by the world's No. 2 soft drinks maker to increase its presence in healthier food and beverages.

PepsiCo and the Pepsi Bottling Group (PBG) said in a statement on Thursday they had agreed to buy 75.53 percent of the juice business of Lebedyanskyfor $1.4 billion.

"From the PepsiCo standpoint, this investment represents one of the most exciting steps our company has ever taken internationally," Zein Abdalla, President of PepsiCo Europe, told a news conference.

"With the Russian juice market forecast to grow to become one of the top five in the world sometime in the next decade, we believe the growth potential of this sector is significant."

PepsiCo currently controls about 2 percent of the Russian juice market through the Tropicana brand, but does not have its own juice-producing facilities in Russia. Its rival CocaCola Co. controls over a fifth of the Russian juice sector after its $530 million purchase of producer Multon in 2005.

Lebedyansky has 30 percent of the Russian juice market and its juice sales last year stood at around $800 million. PepsiCo and PBG said Lebedyansky is the world's No. 6 juice producer.

Once Lebedyansky has spun off its other activities, in baby food and mineral water, PepsiCo and PBG will make a mandatory offer to purchase the shares held by all remaining shareholders in Lebedyansky.

In a separate statement, Lebedyansky said its juice earnings before interest, taxation, depreciation and amortization (EBITDA) rose by 9 percent to $118.3 million in 2007.

The EBITDA margin at the business fell by 2.9 percent to 14.7 percent mainly due to higher costs of sales driven by raw material and packaging price inflation.

But gross margin was stable at 40.2 percent, as the company increased selling prices, it said.

Lebedyansky's total 2007 sales rose by 33 percent to $944.8 million, with 85 percent coming from juice. Net profit before minority interest fell by 10 percent to $79.2 million.

Lebedyansky's juice brand portfolio consists of Ya, Frustyle, Tonus, Fruktovy Sad, Privet and Dolka.

CONDITIONAL AGREEMENT

PepsiCo and PBG will buy shares held by Lebedyansky's four individual shareholders, and that stake will be split, with PepsiCo getting 75 percent and PBG 25 percent.

The deal, the largest ever in the Russian food market, will only take place if Lebedyansky's shareholders approve the spin-off of its water and baby food businesses.

"We now need to see the mineral water and baby food spin-off, to get regulatory approval ... we expect the deal to close in the third quarter," Abdalla told Reuters.

PepsiCo did not say how it will finance the acquisition.