Wrigley to Close South Side Plant:
Company also plans to sell $1B on notes as it completes Altoids deal.

June 29, 2005

(AP) - Wm. Wrigley Jr. announced Wednesday it has competed its acquisition of Life Savers and Altoids from Kraft Foods Inc. and plans to shutter some factories, including one on Chicago's South Side, and lay off about 500 workers as a result of the deal.

The $1.46 billion cash deal also gives the Chicago-based candy maker several other candy brands, including Creme Savers, Sugus candies and some local regional brands in the United States, Europe, Indonesia and Thailand. But the iconic Life Savers and Altoids brands were the biggest prizes in the acquisition.

Meanwhile, the company said Wednesday it plans to sell $1.0 billion of notes within the next few weeks, offering $500 million in five-year notes and $500 million in 10-year notes.

The sales of notes is expected to partially replace the $1.35 billion in commercial paper Wrigley issued to complete the deal with Kraft.

Bill Wrigley, Jr., Wrigley's chairman and chief executive, said adding the brands "represents a significant reinforcement of our position as a world-class confectionery company."

For Kraft, the sale unloads confectionary brands that generated just 1.6 percent of its $31 billion in revenue last year.

Chicago-based Wrigley also said it will close a 94-year old chewing gum factory on Chicago' s South Side and shift production to its plant in Yorkville, Ill., which was built in the 1990's/

Wrigley said that the 600 workers at the Chicago plant will either be transferred, offered early retirement, or laid off.

The company will take a $60 million after-tax charge for the U.S. restructuring, with somewhat less than half of the expenses expected to be incurred in 2005 and the balance next year.

Wrigley said the decision to move production out of Chicago after nearly a century was a difficult one, but stressed the company will maintain its Chicago corporate headquarters and continue to invest in a new research-and-development facility there.

"We value our deep roots in the city of Chicago, even as our business and our workforce continue to change," he said in a statement.

The plant, located at 35th St. and Ashland Ave. was established in 1911 and employed nearly 1,700 at its peak in the late 1960's.

Wrigley also said it would sell the Trolli gummy candies brand - part of the Kraft deal - including a Creston, Iowa, production facility.

It also plans to wind down production over the next 18 months at a newly acquired Kraft facility in Bridgend, Wales, and transfer gum production from a plant in Edison, N.J. to its largest production facility, in Gainesville, Ga.

The purchase price of the brands for Wrigley will be offset by about $300 million in cash tax benefits associated with amortization of intangible assets, the company said. The net acquisition cost of $1.18 billion represents 2.4 times estimated 2004 sales.

Kraft shares went down 12 cents to $31.80 while Wrigley stock was off 24 cents to $69.36 in early Wednesday trading.