Vevey / CH. (nsa) Nestle S.A. has agreed to acquire Kraft Foods' frozen pizza business in the US and Canada for 3,7 billion US-Dollar (USD) in cash. The business includes brands such as DiGiorno, Tombstone, California Pizza Kitchen, Jack´s and Delissio. This frozen pizza business provides a new strategic pillar to Nestle´s frozen food portfolio in the US and Canada, where the Company has already established a leadership in prepared dishes and hand-held product categories under the Stouffer´s, Lean Cuisine, Buitoni, Hot Pockets and Lean Pockets brands. The acquisition brings leadership in the frozen pizza category, where Nestle only had a minor presence until now, and builds on Nestle´s existing pizza know-how and operations in Europe. It is a natural fit with Nestle´s focus on delivering convenient, premium, wholesome and nutritious frozen food for consumers around the world. The transaction is subject to US and Canadian regulatory approval and is expected to be completed in 2010.

Paul Bulcke, CEO of Nestle: «This frozen pizza business greatly enhances Nestle´s frozen food activities in North America, bringing together a selection of great US and Canadian brands, industry-leading R+D and excellent route-to-market capabilities, which complement our existing ice cream direct-store-delivery. With total sales of around three billion Swiss Francs, Nestle will become the world leader in the attractive, fast-growing frozen pizza category».

The US is the largest pizza market in the world with consumer sales of about 37 billion USD. With estimated sales of 2,1 billion USD in 2009, Kraft Foods is the leader in the frozen pizza category and has enjoyed double-digit growth in the US and Canada over the last four years. The DiGiorno and California Pizza Kitchen brands have driven the development of the premium segment, providing consumers and families attractive alternatives to eating out and home delivered pizzas. The business also includes other strong brands with Tombstone and Jack´s. In addition, Delissio is the leading frozen pizza brand in Canada.

The business will be part of Nestle USA. «Our combined capabilities in direct-store-delivery, R+D, innovation and commitment to quality, taste and convenience make this a good strategic fit with our frozen food portfolio», said Brad Alford, Chairman and CEO of Nestle USA.

The business has an estimated 2009 EBITDA of 297 million USD or 14,2 percent of sales, and an estimated EBIT of 279 million USD. Synergies, estimated at seven percent of sales, will be fully realized within five years. On a pre-synergy basis, the transaction is priced at 1,8 times estimated 2009 sales and 12,5 times estimated 2009 EBITDA. The acquisition will enhance Nestle´s earnings per share in the first full year of ownership. All above financial estimates are based on Nestle's IFRS accounting standards.