wsj_0557.xml

WSJ891030-0143 WSJ891030-0143 = 891030
= 891030
891030-0143 . 891030-0143 . RJR Is Selling @ Candy Brands @ For $ 370 Million @ ---- @ By Peter Waldman @ Staff Reporter of The Wall Street Journal RJR Is Selling @ Candy Brands @ For $ 370 Million @ ---- @ By Peter Waldman @ Staff Reporter of The Wall Street Journal 10/30/89 10/30/89
10/30/89
WALL STREET JOURNAL ( J ) WALL STREET JOURNAL ( J ) RJR Z.NES RJR Z.NES TENDER OFFERS , MERGERS , ACQUISITIONS ( TNM ) FOOD PRODUCTS ( FOD ) TENDER OFFERS , MERGERS , ACQUISITIONS ( TNM ) FOOD PRODUCTS ( FOD ) RJR Nabisco Inc. said it agreed to sell its Baby Ruth , Butterfinger and Pearson candy businesses to Nestle S.A. 's Nestle Foods unit for $ 370 million . The sale , at a higher price than some analysts had expected , helps the food and tobacco giant raise funds to pay debt and boosts Nestle 's 7 % share of the U.S. candy market to about 12 % . The candy businesses had sales of about $ 154 million last year , which was roughly 12 % of total revenue for RJR 's Planters LifeSavers unit , according to a memorandum distributed by RJR 's owner , Kohlberg Kravis Roberts & Co. , to bankers last December . The Nestle acquisition includes a candy plant in Franklin Park , Ill. , which employs about 800 workers . The sale , which had been expected , is part of KKR 's program to pay down $ 5 billion of a $ 6 billion bridge loan by February . Roughly $ 2 billion of that debt has already been repaid from previous asset sales , and RJR expects to use another $ 2 billion from the pending , two-part sale of most of its Del Monte unit . That sale , however , could still fall through if financing problems develop . Thus , it remains crucial for RJR to obtain top dollar for its smaller assets like the candy brands . Louis Gerstner Jr. , chairman and chief executive officer of New York-based RJR , called the sale a `` significant step '' in the company 's divestiture program , as well as a `` a strategic divestiture . '' Since KKR bought RJR in February for $ 25 billion of debt , it has agreed to sell nearly $ 5 billion of RJR assets . RJR 's executives have said they will dispense with certain brands , in particular , that are n't leaders in their markets . `` RJR Nabisco and Planters LifeSavers will concentrate more on our own core businesses , '' Mr. Gerstner said Friday . Baby Ruth and Butterfinger are both among the top-selling 15 chocolate bars in the U.S. , but RJR 's overall share of the roughly $ 5.1 billion market is less than 5 % . Nestle 's share of 7 % before Friday 's purchases is far below the shares of market leaders Hershey Foods Corp. and Mars Inc. , which have about 40 % and 36 % of the market , respectively . `` This means Nestle is now in the candybar business in a big way , '' said Lisbeth Echeandia , publisher of Orlando , Fla.-based Confectioner Magazine . `` For them , it makes all kinds of sense . They 've been given a mandate from Switzerland '' to expand their U.S. chocolate operations . Nestle S.A. is based in Vevey , Switzerland . The new candy bars , `` make an important contribution to our Nestle Foods commitment to this very important strategic unit , '' said C. Alan MacDonald , president of Nestle Foods in Purchase , N.Y .