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Kraft Sells Piece of Its Pie to Benefit Priority Categories

NORTHFIELD, Ill. — Kraft Foods here has agreed to sell its frozen pizza business to Nestlé for $3.7 billion. It plans to use proceeds from the deal to increase the cash portion of its $16 billion hostile takeover bid for Cadbury. Kraft estimates that the sale of its North American pizza business, including brands like DiGiorno, Tombstone, Jack’s, Dellisio and the California Pizza Kitchen trademark license, will be completed sometime this year. It generated an estimated $1.6 billion in net revenues last year, according to Kraft.

NORTHFIELD, Ill. — Kraft Foods here has agreed to sell its frozen pizza business to Nestlé for $3.7 billion. It plans to use proceeds from the deal to increase the cash portion of its $16 billion hostile takeover bid for Cadbury.

Nestlé announced yesterday that it doesn’t intend to participate in a formal offer for Cadbury.

Kraft estimates that the sale of its North American pizza business, including brands like DiGiorno, Tombstone, Jack’s, Dellisio and the California Pizza Kitchen trademark license, will be completed sometime this year. It generated an estimated $1.6 billion in net revenues last year, according to Kraft.

“Selling this business now not only delivers an attractive return for our shareholders, but enables us to better focus our resources on priority global brands and categories,” said Irene Rosnefeld, chairman and chief executive officer, in a statement.

With $535.6 million in sales in food stores for the 52 weeks ending Sept. 6, 2009, Kraft’s DiGiorno was by far the leading frozen pizza brand during a year when overall category sales rose 5.8%, according to Information Resources Inc. The DiGiorno brand in particular experienced a 16% sales increase over the previous year.

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