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Mondelez to buy 80 pct of Vietnam's Kinh Do Corp's snack business

Mondelez to buy 80 pct of Vietnam's Kinh Do Corp's snack business

Tuesday, November 11, 2014, 14:59 GMT+7

Mondelez International Inc said on Tuesday it will pay $370 million to buy an 80 percent stake in Vietnamese company Kinh Do Corp's snack business.

Mondelez, based in Deerfield, Illinois, already has a small presence in Vietnam selling some of its Oreo, Ritz and Cadbury products.

Mondelez will acquire two Kinh Do manufacturing facilities, as well as Kinh Do's distribution network.

The deal will allow Mondelez to build scale. Kinh Do is Vietnam's biggest confectionary producer and makes products such as Cosy biscuits and Solite soft cakes.

Vietnam has a growing middle class, and 60 percent of the population is under 30 years old, presenting an opportunity to attract younger generations to Mondelez products.

"It's a perfect fit for our Asian growth strategy," Tim Cofer, president of the Asia Pacific business, said in an interview.

Mondelez has an option to buy the remaining shares of Kinh Do's snack business a year after the completion of the initial deal, which is expected to close in the second quarter of 2015.

Mondelez split from Kraft Foods Group Inc in 2012 and stumbled out of the gate as an independent company with a string of disappointing quarterly results that led the company to undertake several cost-cutting initiatives.

"The opportunity to continue to invest in high growth emerging markets in the core categories where we compete is fundamental to our growth strategy," Cofer said.

Mondelez has struggled in the Asia Pacific region. Sales there when adjusted for currency are down 3 percent year-to-date, mainly because of weakness in demand for biscuits in China and the company's own missteps in that market.

Cofer expects business in China to turn around. In the most recent quarter ended Sept. 30, China was up in the high single digits, partly driven by the company's new thin Oreos, which have been a success with young adult females, he said. 

Reuters

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