Wrigley to buy 80% stake in Russian chocolate maker
January 23, 2007
by Eric Schroeder
CHICAGO — The Wm. Wrigley Jr. Co. on Tuesday signed a purchase agreement to pay $300 million for an 80% initial stake in A. Korkunov, a privately held premium chocolate company in Russia.
The $300 million being paid by Wrigley for the 80% stake will be offset in part by approximately $55 million in cash tax benefits.
Wrigley said it will fund the transaction with available cash and a "modest" amount of debt. The company plans to purchase the remaining 20% stake in Korkunov over time.
"We have always said we would enter the chocolate segment of the total confectionery business if the right opportunity to create value for the Wrigley Co. became available — and this acquisition presents such an opportunity," said Bill Wrigley, Jr., executive chairman of the company and chairman of the board. "A. Korkunov has strong brands and is a key player in the premium chocolate segment in Russia — an already strong and dynamic geography for the Wrigley Co. where we are the No.1 player in the chewing gum category.
"Entering into the premium chocolate category is not only a great strategic fit and an expected driver of new growth opportunities in one of our top priority global geographies, it also represents an important addition to our competencies and has the long-term potential to create value in marketplaces around the world."
Founded in 1999 by two Russian entrepreneurs, Andrey Korkunov and Sergey Lyapuntsov, A. Korkunov has become the seventh largest player in the overall Russian chocolate category, which has an estimated value of $3.7 billion. It is also the No. 2 player in the overall premium-boxed chocolate segment, with its namesake brand — A. Korkunov — the top-seller in that segment.
The company markets its premium products across Russia through a well-established distributor network, and its production facility, just outside of Moscow, manufactures a wide range of product offerings, including boxed, tablet (bars) and loose chocolates.