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Food-Tobacco Company Confirms Talks About Selling Food Service Business

September 30, 1994

NEW YORK (AP) _ Philip Morris Companies Inc. said Friday it is in negotiations with a potential buyer it did not identify for its Kraft Foodservice business.

The Wall Street Journal had reported in Friday’s editions that food industry executives and analysts said Philip Morris was negotiating to sell the business for an expected $600 million to $800 million.

The foodservice business distributes packets of ketchup, sugar and other condiments to restaurants and industrial-sized packages of cheese, mayonnaise, salad dressings and other products to hospitals and cafeterias.

Philip Morris, with makes brands that include Marlboro cigarettes, Miller beer and Maxwell House coffee, issued a brief statement confirming the talks late in the afternoon.

It said ″a number of parties have expressed interest in a possible acquisition of its Kraft Foodservice business and that it is presently in negotiations with one such party.″

Philip Morris spokesman Barry Holt declined to identify who it is talking with or to provide financial details on the size of the foodservice business.

The Journal said the likely potential buyer was Clayton Dubilier & Rice Inc., a New York-based investment firm that specializes in in buying businesses being divested by major corporations.

Clayton Dublier spokesman John Higgins said, ″We never comment on this kind of specualtion.″

In trading on the New York Stock Exchange, Philip Morris rose $1.12 a share to $61.12 1/2 .

Philip Morris has been under pressure from shareholders to take steps to boost the value of the company’s stock. It recently announced a dividend increase of 20 percent and authorized spending $6 billion to buy back shares, a move that would support its share price, over the next three years.

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