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Mondelez International, the American food company that makes Oreo cookies, just announced its acquisition of a European snack maker, Chipita, for $2 billion. The company’s CEO described the purchase as a “win-win” for both sides.
Dirk Van de Put, Mondelez’s chief executive officer, said on Thursday, May 27, that its latest acquisition is a highly beneficial deal for both companies. Chipita is a Greek company that is known for its baked snack and croissants.
Why the deal is good for both parties
The Mondelez chief said that acquiring Chipita will surely help the company earn more since it is also offering popular food items that generate millions of dollars. Now, for the $2 billion purchase, the American company is planning to pay by using some cash on hand and new debt issuance.
“We can use their distribution, their presence to build our distribution, but also to bring our brands to their products,” the Mondelez CEO told CNBC via the “Mad Money” podcast. “Imagine a croissant with Cadbury chocolate or Milka chocolate. It’s a real win-win situation, in my opinion.”
Van De Put also believes that Chipita’s products that include Fineti and Chipicao are quite popular in Eastern Europe, and they can further grow and become a favorite in other parts of the world as well. He can see their growth potential in the global markets.
The acquisition deal
As per Nasdaq, Chipita generated around $580 million last year, and Mondelez, which makes the Oreo brand, is doing as great. With their merger, it is easy to see how their revenues will increase in the coming years.
In any case, Mondelez and Chipita’s deal is still subject to closing purchase price adjustments and must attain the relevant antitrust approvals. Once these are done, the deal will be officially complete.
“Welcoming Chipita S.A.’s delicious pastry products into the Mondelēz International family advances our strategy to become the global leader in broader snacking,” Dirk Van de Put said in a separate press release. “Their iconic brands and significant scale across so many attractive geographies make them a strong strategic complement to our existing portfolio and future growth ambitions in Europe and beyond.”
