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

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

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.