Philip Morris Co. Inc. to purchase Nabisco Holdings Corp. for 1.80 times revenue

Weekly Corporate Growth Report, Jul 3, 2000

The Deal: In a transaction that will create the world's most profitable food company, Philip Morris, the parent of Kraft Foods, has announced that it has agreed to acquire Nabisco Holdings, the food company that makes and markets oreo cookies. Ritz Crackers and other well known foods, for a little over $14.9 billion. Since late March, to price that Philip Morris agreed to pay, Nabisco Holding's stock price has risen 101 percent.

Discussion: The Nabisco Holdings Corp. is the No. 1 U.S. cookie and cracker maker, with leading brands such as Oreo, Chips Ahoy! and Ritz. Nabisco also makes Grey Poupon mustard, Milk-Bone pet snacks, Planters nuts and LifeSavers candies. Nabisco Holdings will become part of the world's No. 2 food company after Philip Morris buys it and combines it with Kraft Foods. About 30 percent of Nabisco's sales come from outside the U.S.

Philip Morris Companies is the world's largest tobacco firm; it controls about half of the U.S. tobacco market, and the Marlboro name is one of the world's most valuable brands. The company also makes such brands as Benson & Hedges, Parliament and Virginia Slims. About 40 percent of Philip Morris' sales and one-third of its profits come from its food and beer subsidiaries. Its Kraft Foods unit is the No. 2 food company in the world (after Nestle) and No. 1 in the U.S., with such leading brands as Jell-O, Kool-Aid, Maxwell House, Oscar Mayer and Post cereals. Philip Morris' Miller Brewing is the No. 2 U.S. brewer, after AnheuserBusch.