Kraft Foods to Sell Fruit2O and Veryfine to Sunny Delight Beverages Co
The transaction is expected to be completed during the fourth quarter. In anticipation of the sale, Kraft will record a one-time, pre-tax asset impairment charge of approximately $125 million in Q3.
04/10/07 Kraft Foods Inc., a global leader in branded food and beverages, announced that it has agreed to sell its Fruit2O water and Veryfine juice brands and related assets to Sunny Delight Beverages Co., a leading producer of juice-based drinks in North America and Western Europe. These brands had net revenues of approximately $135 million in 2006.
"As we restore Kraft to reliable growth, we're focusing our investments on the brands that best fit with our long-term growth strategies," said Rick Searer, Kraft Executive Vice President and President, Kraft North America. "Fruit2O and Veryfine are great brands that have found a wonderful home in Sunny Delight. However, for Kraft, we believe we will create greater long-term shareholder value by selling, rather than investing in, these brands."
The sale includes the Fruit2O, Fuel2O and Veryfine brands, certain manufacturing equipment and the Littleton, Mass. manufacturing facility. As part of the transaction, approximately 200 employees will join Sunny Delight Beverages Co. "We are grateful to the Veryfine employees for their commitment and dedication to the business, and wish them continued success in the future," said Searer.
The transaction is expected to be completed during the fourth quarter. In anticipation of the sale, Kraft will record a one-time, pre-tax asset impairment charge of approximately $125 million in Q3. The after-tax impact to net earnings is a charge of approximately $55 million, equivalent to 3 cents diluted earnings per share. Kraft anticipates no material impact to earnings on an ongoing basis.
