Kraft Foods Inc. (KFT: 28.99 -0.04 -0.14%) has agreed to sell Cadbury Plc’s chocolate confectionery business in Romania to international investment fund Oryxa Capital for an undisclosed amount to fulfill the European regulatory requirement of its $19 billion Cadbury acquisition.The sale includes Kandia-Excelent brands (Rom, Magura, Kandia, Laura, Sugus and Silvana and others), related trademarks and the manufacturing facility in Bucharest. The deal is subject to regulatory approvals.
In January 2010, the European Commission cleared Kraft’s bid for Cadbury on the condition that the former would divest Cadbury’s Polish and Romanian chocolate confectionery businesses. Consequently, on June 28, 2010, Kraft Foods completed the sale of Cadbury’s E. Wedel-branded chocolate and sugar confectionery operations in Poland to Tokyo-based Lotte Group for an undisclosed sum. The sale included the E. Wedel business, its related brands and a manufacturing facility in Warsaw.
Kraft took over Cadbury in February 2010 following a six-month fight for control of the confectionary giant, paying £11.7 billion (about $19 billion) or 850 pence per share (approximately $13.86 per share).
Kraft Food’s first quarter earnings reflected the future potential of the Kraft-Cadbury deal. First-quarter earnings of 49 cents per share were up 19.5% year over year. However, it was below the Zacks Consensus Estimate of 55 cents per share. Cadbury contributed 7 cents to the quarter’s earnings.
Net revenue for the quarter increased 26% year over year to $11.3 billion, primarily due to the favorable 18.9% impact from the Cadbury acquisition and a 4.2% impact from foreign currency, partially offset by a negative 0.4% impact from divestitures. Organic revenue increased 3.9%, driven by a 3.3% organic growth of Kraft Foods’ base business and an 8.2% organic growth at Cadbury.
In dollar terms, Cadbury contributed net revenue of $1,693 million and net earnings of $60 million from February 2, 2010, through March 31, 2010.
The company expects organic net revenue growth of at least 4% in 2010, driven by approximately 4% organic net revenue growth of Kraft Foods’ base business and approximately 5% organic net revenue growth at Cadbury.
Kraft expects operating earnings per share (EPS) of at least $2.00 for 2010, reflecting strong growth of Kraft Foods’ base business, pegged at the high end of the company’s 7% to 9% long-term EPS growth target. Further, Cadbury is also expected to contribute as it benefits from past cost saving initiatives and a modest contribution from cost synergies.
For 2011, the company expects to deliver its long-term target of at least 5% organic net revenue growth and growth in operating EPS in the mid-teens range.
The combination of Kraft Foods and Cadbury is expected to yield meaningful revenue synergies over time from investments in distribution, marketing and product development. The acquisition will expand Kraft’s international presence, exposure to faster-growing markets and provide a larger platform to distribute the existing brands.
Kraft Foods is the world’s second largest food company, making snacks, confectionery and quick meals for billions of consumers in more than 160 countries. The portfolio includes 11 iconic brands with revenues exceeding $1 billion ─ Oreo, Nabisco and LU biscuits; Milka and Cadbury chocolates; Trident gum; Jacobs and Maxwell House coffees; Philadelphia cream cheeses; Kraft cheeses, dinners and dressings; and Oscar Mayer meats. 
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