United Biscuits Operations Acquired by Kraft

11/07/06 Kraft Foods Inc. announced today that it will acquire the Spanish and Portuguese operations of United Biscuits (UB). The agreement also returns to Kraft the rights to all Nabisco trademarks, including Oreo and Ritz, in the European Union, Eastern Europe, the Middle East and Africa.

In addition to the Nabisco trademarks, the UB operations in Spain and Portugal include leading local biscuit brands, such as Fontaneda, Filipinos, Artiach, Chiquilin and Triunfo, as well as the leading dry dessert business in Iberia, Royal. The deal also includes UB's Iberian canned meat, tomato, and fruit juice businesses under the well-known brand names Apis and Fruco, as well as all seven UB manufacturing facilities and 1,300 employees in Iberia. Together, these Iberian-based businesses generated net revenues of approximately $400 million in 2005.

Hugh Roberts, president, Kraft International Commercial, said, "We are delighted to be significantly expanding the global scope of our Nabisco biscuit brands by recovering the licenses UB has held since 2000. With our broader portfolio of strong trademarks, we look to achieve even faster growth in this key category."

Commenting on Kraft's acquisition of UB's Spanish and Portuguese operations, Joachim Krawczyk, group vice president & president, Kraft EU Region, said, "This deal makes us the Iberian category leader in biscuits and dry desserts. Through this acquisition, we are getting both great brands and great people that we are very happy to have joining the Kraft family."

The company's acquisition of UB Iberia and the Nabisco trademark rights for the identified markets is valued at $1,070 million, subject to certain adjustments at closing. The acquisition is financed by the assumption of approximately $548 million of debt issued by the acquired business immediately prior to the acquisition, as well as $522 million of value for the redemption of Kraft's outstanding investment in UB, primarily deep discount securities. This redemption will result in the recognition of a non-cash, pre-tax gain of approximately $243 million. Excluding the impact of the one-time gain, the transaction is expected to be approximately 2 cents accretive to earnings per share during the first twelve months of ownership.

The transaction is expected to close in the third quarter. After closing, Kraft will no longer have any interest in United Biscuits or any of its affiliates.