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Monday, 26 June, 2000, 06:13 GMT 07:13 UK
Philip Morris buys Nabisco
Nabisco produces America's most popular cookies, Oreo.
Nabisco produces America's most popular cookies, Oreo.
US tobacco and consumer goods company Philip Morris has bought America's No. 1 cookie and cracker maker, Nabisco, for $14.9bn, ending a weeks-long bidding war.

Under the terms of the deal, Philip Morris will also assume Nabisco's debt of $4bn, valuing the total deal at $18.9bn.

France's Danone and Cadbury's Schweppes were also bidding to buy the company since it put itself on the block earlier this year.

Corporate raider Carl Icahn, who owns nearly 10% of the holding company, added his bid to the fray. It was Mr Icahn threat of a partial tender offer that forced Nabisco to put itself up for sale.

Expands food business

The purchase fills a hole in Philip Morris' food portfolio, which does not include cookies and crackers.

The company is the world's largest cigarette producer, with its Marlboro, Benson and Hedges and Parliament brands. It also owns Kraft Foods.

"The combination of Kraft and Nabisco will create the most dynamic company in the food industry, both in terms of absolute earnings levels and revenue and earnings growth rates," said Philip Morris chief executive Geoffrey Bible.

The two companies had combined revenues of $34.9bn last year and will be the world's second largest food group, second only to Switzerland's Nestle, which has annual sales in excess of $35bn.

The world food market is rapidly consolidating, with valuable brands being acquired for a big premium by global players.

Unilever recently acquired Bestfoods, the US maker of Hellmann's mayonnaise and Skippy peanut butter, for more than $20bn.

And on Friday food conglomerate ConAgra said it was buying International Home Foods, the maker of Chef Boyardee products, Pam cooking spray and Gulden's Mustard, for $1.6bn in cash.

Nabisco's strengths

Nabisco, with sales of $8bn a year, is based in northern New Jersey.

Its brands include Fleischmann margarine, Oreo and Chip Ahoy cookies, Ritz biscuits, Planters peanuts, Lifesaver sweets, and A1 steak sauce.

It has 50,000 employees worldwide and 107 bakeries and food processing plants.

Its shares have risen 63% this year since it announced that it was putting itself up for sale.

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See also:

16 May 00 | Business
Thirteen suitors for US food firm
29 Feb 00 | Business
Nabisco shares the biscuit
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