Chief of PepsiCo to Get Chairman’s Post

PepsiCo said that its board had elected its chief executive, Indra K. Nooyi, to succeed Steven S. Reinemund as chairman when he retires in May.

Ms. Nooyi, 51, joined PepsiCo, based in Purchase, N.Y., in 1994 and led its global strategy for more than a decade. She told analysts in October she planned to increase budgets for products like Tava calorie-burning drinks and to spend $500 million a year on acquisitions like the Stacy’s Pita Chip Company.

Mr. Reinemund, 58, announced his departure in August. Ms. Nooyi will retain the chief executive post.

Ms. Nooyi served as chief financial officer before being named chief executive in October. She oversaw the acquisitions of Quaker Oats and Tropicana and the spin off of Yum Brands restaurants, including KFC and Taco Bell.

Shares of PepsiCo fell 21 cents, to $64.83, on the New York Stock Exchange.

Democrats Lift Up Generics

Senators argue against FDA plans to close labs

Kohl: Authorized-generics ban possible

Prospects are good for passage of a bill banning authorized generics, U.S. Sen. Herb Kohl, D-Wis., said Wednesday.

Eliminating so-called authorized generics -- whereby a brand-drug manufacturer produces a generic version of its own drug after the drug goes off patent -- is a "tremendous cost-saving alternative," Kohl told reporters. "It would reduce the cost of medicine without hurting anyone.

"There's a lot of hope this can have bipartisan support."

The chairman of the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights reintroduced a bill Tuesday that would make it illegal for brand-name pharmaceutical manufacturers to produce generic versions of their own drugs.

The bill is co-sponsored by Sens. John Rockefeller, D-W.Va., Charles Schumer, D-N.Y., and Patrick Leahy, D-Vt.

By federal law, the first producer of a generic version of a drug gets a 180-day, marketing-exclusivity period, during which no other generic versions can be sold.

There is also a possibility that a provision banning authorized generics will be included in the Senate version of a bill authorizing the secretary of health and human services to negotiate lower drug prices for Medicare Part D, Kohl said.

It could encourage drug companies to be more flexible at the negotiating table if the generic market is more competitive, he added. "It's better to lose some of your profit than all of your business."

Brand-name pharmaceutical companies say authorized generics are a good choice for consumers, who would not have that option under the proposed ban.

Generic-drug manufacturers argue authorized generics, which are generally more expensive than other generic versions of drugs, are unfair patent extensions.

Altria Sets Kraft Spinoff for March 30

 Altria Group Inc. on Wednesday said it plans to spin off its 89 percent stake in Kraft Foods Inc. on March 30, completing the long-awaited separation of the maker of Oreo cookies from the Philip Morris tobacco companies.

Under terms of the spin off plan, Altria shareholders will receive 0.7 share of Kraft for each Altria share they own.

The timing of the spin off is earlier than some analysts had anticipated and means new Kraft Chief Executive Irene Rosenfeld will have less time to put her strategy for the foodmaker in place before it becomes an independent company. Kraft shares fell almost 1.5 percent on the news, while Altria shares were up less than 1 percent.

The spin off has been eagerly awaited since Altria management first spoke of the idea more than two years ago. The company held off on the separation until it received favorable rulings in several large tobacco liability lawsuits. Altria's predecessor, Philip Morris Cos. Inc., acquired Kraft in 1988.

``I believe that an independent Kraft will enjoy enhanced flexibility to grow its business and be in a substantially stronger position to create enduring shareholder value,'' said Louis Camilleri, Altria Chairman and Chief Executive Officer. Camilleri is currently also Kraft's chairman but will be leaving that post in connection with the spin off.

Altria said a ``when issued'' public market will be established on the New York Stock Exchange before the record date of the spin off for trading of Altria shares without the Kraft holding.

Anticipation of deal had helped lift shares of Altria, a component of the Dow Jones industrial average (.DJI), about 21 percent in the past year, with the stock reaching an all-time high of $90.50 on January 11.

Altria shares were up 76 cents to $88.30 on Wednesday on the New York Stock Exchange and Kraft was down 50 cents at $34.33.

Pfizer buying BioRexis Pharmaceutical

Drug developer Pfizer Inc. said Thursday it is buying privately held BioRexis Pharmaceutical Corp. for an undisclosed amount.

BioRexis is developing several treatments for diabetes. The technology being used to develop those treatments uses protein engineering and could have the potential to improve drug tolerability and reduce dosing frequency, Pfizer said.

Shares of Pfizer rose 35 cents to $26.59 on the New York Stock Exchange in morning trading.

Interstate Bakeries names new CEO, reports $12.9 million loss

 

Interstate Bakeries Corp., the bankrupt maker of Twinkies and Wonder bread, on Tuesday named Craig D. Jung as chief executive officer, replacing interim CEO Tony Alvarez.

 

The appointment is subject to U.S. Bankruptcy Court approval, with a hearing scheduled Feb. 16. The court will also be asked to approve Jung's appointment to the company's board of directors.

 

Also on Feb. 16, the company will also ask the court to extend the maturity of its debtor-in-possession financing facility to February 2008. The current expiration date is June 2, 2007.

 

Jung, 53, previously served as CEO of Panamerican Beverages, formerly the world's third-largest Coca-Cola bottler. He also spent 11 years at PepsiCo and served as founding chief operating officer of Pepsi Bottling Group.

 

Alvarez has served as Interstate's interim CEO since the company filed Chapter 11 protection in September 2004. He is the co-founder and co-chief executive of Alvarez & Marsal, a corporate advisory and turnaround management services firm brought in by Interstate Bakeries.

 

The company said Jung's proposed three-year contract includes an annual base salary of $900,000, a $1.2 million signing bonus and, beginning in the 2009 fiscal year, eligibility for bonuses tied to fulfillment of the company's performance goals.

 

Jung's appointment came the same day that Interstate Bakeries said its monthly losses increased 80 percent in December on lower sales and slightly lower costs.

 

For the four weeks ending Dec. 16, the Kansas City-based company said it lost $12.9 million on revenues of $213.1 million.

 

In November, the company reported losing $7.15 million on sales of $222.3 million. A year ago, in the same four-week period ending in December, Interstate lost $9.7 million on $223.8 million in revenue.

 

Costs of goods sold and other operating expenses during December decreased 1.7 percent from the previous month to $213.8 million.

 

The U.S. Bankruptcy Court has required monthly reports from Interstate Bakeries since the company filed for Chapter 11.

 

Interstate's shares, which trade on the over-the-counter market, gained 15 cents, or 6.7 percent, to close at $2.40 before the report was filed. The stock has traded in a 52-week range of $1.92 to $9.95.

 

Interstate Bakeries said it has not borrowed under its $200 million debtor-in-possession financing facility, but has used it to issue letters of credit totaling $109 million, mostly to support its insurance programs.

Sanofi, Bristol-Myers deal seen near

 

Pre-merger agreement to have been signed last week and could create the largest drug company, report says.

Sanofi-Aventis and Bristol-Myers Squibb Co could announce a friendly merger deal within the next few weeks to create the world's biggest drug companies, according to a report Monday.

In an unsourced story, French financial newsletter La Lettre de l'Expansion said a pre-merger deal was thought to have been signed last week.

Buying Bristol-Myers would be a coup forSanofi's ambitious chairman and veteran deal maker, Jean-Francois Dehecq, who is due to retire from the French firm at the end of 2009.

The acquisition of the U.S. company - which has a market value of around $51.5 billion - would see Sanofi leapfrog Pfizer Inc as the biggest pharmaceuticals company in the world by sales and push GlaxoSmithKline Plc back into third place.

Sanofi and Bristol-Myers have long been tipped as possible merger partners, since they work together in marketing the hugely successful blood thinner Plavix, as well as Avapro for hypertension.

A Sanofi spokesman said the company did not comment on press speculation.

Still, many analysts and industry executives are convinced Sanofi has been taking a long, hard look at U.S.-based Bristol-Myers in recent months.

"This wouldn't surprise me. Sanofi needs increased exposure to the U.S. market. They have substantially deleveraged their balance sheet since they took over Aventis, so they are prone to do something going forward," WestLB analyst Oliver Kaemmerer said.

Any bid could be a mixture of cash and shares, he said.

Novartis Chairman and Chief Executive Daniel Vasella said only last month he believed such a deal could be on the cards.

"I would not be surprised if companies, which are connected via products - like Sanofi-Aventis and Bristol-Myers Squibb - think about a merger," Vasella told a Swiss newspaper.

Dilutive?

Sanofi, with a market capitalization of €95 billion ($123 billion), is twice the size of Bristol-Myers, but its shares are less highly rated, and analysts believe an acquisition could significantly dilute Sanofi earnings.

Bristol-Myers, whose shares have been buoyed in recent months in part by takeover speculation, trades on around 21 times forecast 2007 earnings while Sanofi fetches just 13.3 times, according to Reuters data.

Analysts believe any final deal for Sanofi to buy its smaller U.S. partner is likely to be contingent on the outcome of litigation surrounding blockbuster Plavix.

A key court case over Plavix patents opened in the United States last week, with the two allies fighting a challenge from Canadian generic drugmaker Apotex. A verdict is not expected before the third quarter of the year.

Most analysts bet Sanofi and Bristol-Myers will win the case, which could then clear the way for a full-blown merger.

Bristol-Myers has been seen as vulnerable to a takeover for some time, following management upheaval, while Sanofi would benefit from adding the U.S. company's many new experimental drugs to its pipeline.

"Bristol-Myers becomes a very attractive takeover prospect because it has very solid pipeline, once the Plavix issue is resolved," a second analyst commented.

Shares in Sanofi slipped back after the report, after initially rising as much as 0.8 percent. They were down 0.9 percent at €69.30 ($89.50) by 4:30 a.m. ET.

Kraft sells Cream of Wheat to B&G Foods in $200M deal

 

Kraft Foods  said Tuesday it would sell its hot cereal business, including the 114-year-old hot cereal brand Cream of Wheat, to a subsidiary of B&G Foods for $200 million.

"Our decision to sell Cream of Wheat is part of a broader effort at Kraft to focus our portfolio," Rick Searer, president of Kraft's North America commercial segment, said in a statement.

The largest North American foodmaker is focusing resources on products such as cheese, snacks and beverages.

Kraft said the sale to B&G also includes the Cream of Rice label and manufacturing equipment.

Last year, the Cream of Wheat brand had a net revenue of $60 million.

The sale requires regulatory approval.

Kraft said it expects to record a pre-tax asset impairment charge of $69 million. The deal will be dilutive by 1 cent a share in 2007.

Kraft, which makes products from Oreo cookies to South Beach Diet foods, has been selling off several brands as it prepares to be spun off by parent company Altria Group. Altria has said it plans to announce details about the spin off next week.

B&G, which has assembled a portfolio of smaller brands that include Ortega Mexican foods and Polaner fruit spreads, said it will fund the acquisition with additional debt and that it has received commitments for senior secured debt financing from Lehman Bros. and Credit Suisse.

Cardinal Health, Inc.  To Sell Pharmaceutical Technologies And Services Segment To The Blackstone Group For $3.3 Billion

Cardinal Health, the leading provider of products and services supporting the health-care industry, today announced it has reached an agreement to sell its Pharmaceutical Technologies and Services (PTS) segment to The Blackstone Group for approximately $3.3 billion in cash.

Cardinal Health and Blackstone have signed a definitive agreement for Blackstone to acquire the PTS businesses that develop, manufacture and package medication and other products for pharmaceutical and biotech firms, employ approximately 10,000 at more than 30 facilities worldwide and generate approximately $1.8 billion in annual revenue. Cardinal Health announced on Nov. 30, 2006 that it planned to divest the segment to focus resources on its four remaining segments serving health-care provider customers, such as hospitals and pharmacies.

"We made very rapid progress in less than two months to reach an agreement with such a quality organization as The Blackstone Group," said R. Kerry Clark, president and chief executive officer of Cardinal Health. "The move allows us to accelerate the repurchase of Cardinal Health shares and focus our full attention on our mission to help make health care safer and more productive through our supply-chain and clinical products businesses."

Chinh Chu, Senior Managing Director of The Blackstone Group and Alex Erdeljan, Senior Advisor to The Blackstone Group stated, "We are attracted to the strong industry fundamentals and leadership market positions of PTS in contract manufacturing, drug development, and packaging and printing services. We will work in concert with PTS' proven and experienced management team to build upon and strengthen their platform of competitive offerings, in order both to accelerate and enhance the growth and profitability of the PTS businesses."

As previously announced, Cardinal Health plans to use the net proceeds from the sale to repurchase shares. The sale is expected to generate approximately $3.1 billion in after-tax proceeds. The net book value of the PTS segment is approximately $2 billion. The sale is expected to close early in Cardinal Health's fiscal fourth quarter and is subject to customary closing conditions, including regulatory approvals.

Cardinal Health will retain Martindale and Beckloff Associates, two businesses that support the generic pharmaceutical market. Martindale develops generic, intravenous medicine that is complementary to Cardinal Health's hospital business and generics strategy. Beckloff provides pharmaceutical regulatory consulting, including services for Cardinal Health generic products. Combined, these businesses have approximately 400 employees at two primary locations in the United States and United Kingdom.

PTS is the leading contract manufacturing and service provider for the pharmaceutical industry. Among its core offerings, it develops and manufactures oral and sterile medication in nearly all dosage forms, and holds patents for softgel and Zydis® fast-dissolve technologies used in many popular prescription and over-the-counter medicine. The segment is also the largest contract packager of pharmaceuticals.

Blackstone has been a leader in the field of private equity investing since 1987, managing $28 billion through its Blackstone Capital Partners I, II, III, IV, and V and Blackstone Communications Partners funds.

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH - News) is an $81 billion, global company serving the health-care industry with a broad portfolio of products and services. Through its diverse offerings, Cardinal Health delivers health-care solutions that help customers reduce their costs, improve safety and productivity, and deliver better care to patients. The company manufactures, packages and distributes pharmaceuticals and medical supplies, offers a range of clinical services and develops automation products that improve the management and delivery of supplies and medication for hospitals, physician offices and pharmacies. Ranked No. 19 on the Fortune 500, Cardinal Health employs more than 55,000 people on six continents. More information about the company may be found at www.cardinalhealth.com.

About The Blackstone Group

The Blackstone Group, a global private investment and advisory firm, was founded in 1985. The firm has raised approximately $75 billion for alternative asset investing since its formation of which over $30 billion has been for private equity investing. Blackstone has a significant commitment to the healthcare sector with investments in Biomet (orthopedics and dental, pending investment), Emcure (pharmaceuticals), Encore Medical (rehabilitation products), Gerresheimer (healthcare packaging), Health Markets (health insurance), Southern Cross (nursing homes), Team Health (ambulatory care), and Vanguard (hospitals). Blackstone's other core businesses include Private Real Estate Investing, Corporate Debt Investing, Hedge Funds, Mutual Fund Management, Private Placement, Marketable Alternative Asset Management and Investment Banking Advisory Services. Further information is available at http://www.blackstone.com.

Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These forward- looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: competitive pressures in its various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; changes in the distribution patterns or reimbursement rates for health-care products and/or services; the results, consequences, effects or timing of any inquiry or investigation by or settlement discussions with any regulatory authority or any legal and administrative proceedings, including shareholder litigation; uncertainties related to completing the divestiture of the PTS segment, including the fulfillment or waiver of conditions to closing under the acquisition agreement and any adjustments as to the amount of actual proceeds to be received; the costs, difficulties and uncertainties related to the integration of acquired businesses; with respect to future share repurchases, the approval of the board of directors, which is expected to consider Cardinal Health's then- current stock price, earnings, cash flows, financial condition and prospects as well as alternatives available to Cardinal Health at the time any such action is considered; and general economic and market conditions. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.

Source: DUBLIN, Ohio, Jan. 25 /PRNewswire-FirstCall/

 

 

Officials said they plan to use much of the money to pay off debt.

 

Earlier this month, CoolBrands sold its yogurt division for $45 million in cash, and in November 2006, it sold some of its U.S. Eskimo Pie distribution assets for $5 million.

 

Switzerland-based Nestle, which also owns the Haagen-Dazs ice cream brand, Butterfinger ice cream bars and Push Up frozen snacks, is battling for market share with Unilever, whose ice cream brands include Ben & Jerry's.

 

Nestle already controlled about a quarter of the U.S. frozen dessert market after buying the Dreyer's shares it didn't already own last January.

Kraft sells Cream of Wheat to B&G Foods in $200M deal

 

Kraft Foods said Tuesday it would sell its hot cereal business, including the 114-year-old hot cereal brand Cream of Wheat, to a subsidiary of B&G Foods for $200 million.

"Our decision to sell Cream of Wheat is part of a broader effort at Kraft to focus our portfolio," Rick Searer, president of Kraft's North America commercial segment, said in a statement.

The largest North American foodmaker is focusing resources on products such as cheese, snacks and beverages.

Kraft said the sale to B&G also includes the Cream of Rice label and manufacturing equipment.

Last year, the Cream of Wheat brand had a net revenue of $60 million.

The sale requires regulatory approval.

Kraft said it expects to record a pre-tax asset impairment charge of $69 million. The deal will be dilutive by 1 cent a share in 2007.

Kraft, which makes products from Oreo cookies to South Beach Diet foods, has been selling off several brands as it prepares to be spun off by parent company Altria Group. Altria has said it plans to announce details about the spinoff next week.

B&G, which has assembled a portfolio of smaller brands that include Ortega Mexican foods and Polaner fruit spreads, said it will fund the acquisition with additional debt and that it has received commitments for senior secured debt financing from Lehman Bros. and Credit Suisse.