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Kraft Foods and R&R Ice Cream in £100M deal

By Freddie Dawson , 06-Dec-2011
Last updated on 06-Dec-2011 at 12:42 GMT

Up to £100M in sales could be generated by a new ice cream partnership between Kraft Foods and R&R Ice Cream, R&R claimed this week.

Europe’s largest own-label ice cream manufacturer is set to develop, manufacture and distribute five brands across 10 European markets for Kraft Foods. The brands are: Milka, Toblerone, Daim, Oreo and Philadelphia.

The deal will see R&R sell the brands from next spring in Germany, Austria, Switzerland, France, Italy, Spain, Portugal, Netherlands, Belgium and Luxembourg.

The products are likely to be based on R&R’s Nestlé Potz range, which is sold in an individual serving format and has proved successful in the UK, according to the firm.

James Lambert, R&R chief executive, told FoodManufacture.co.uk:“I fully expect the Kraft deal to transform the European business in much the same way as the 2001 acquisition of the Nestlé ice cream business changed our UK operations.”

Capacity

The recent purchase of German manufacturer Durigon Gelato was necessary to give R&R the capacity to handle the deal, Lambert told FoodManufacture.co.uk.

The purchase of Durigon, and French manufacturer Pilpa earlier this year, was made possible by a €350M bond created through the issue of senior secured notes. This form of funding takes priority over other unsecured loans­. The notes will fall due in 2017.

Lambert said the firm expects to acquire more European manufacturers in the near future.

“R&R is in great shape for 2012," he said. The surplus cash from last November’s €350M bond will be fully invested by early next year, resulting in significantly increased earnings before interest, taxes, depreciation, and amortisation (EBITDA) and free cash flows.

“Our cash flow generation will also enable us to further pursue our strategy of consolidating the European ice cream market and investing in our factories to reduce costs and increase innovation for customers and consumers.”

Third-largest

R&R Ice Cream was created in 2006 by Oaktree Capital Management by bringing together Richmond Ice Cream in the UK and Roncadin in Germany. The Yorkshire-based firm acquired Roland, France’s third-largest ice cream manufacturer, in 2010.

Meanwhile, US food and snacks group Kraft said that Irene Rosenfeld, currently chairman and ceo of Kraft Foods, will become the chairman and ceo of its new global snacks company.

Kraft is expected to complete the spin-off of its snacks and grocery business by the end of next year.

The global snacks firm will have “…$31bn in estimated revenue and a significant presence in numerous fast-growing, international markets”, said the firm.

Anthony Vernon, currently executive vice president and president, Kraft Foods North America, will become ceo of the $17bn North American grocery company.

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