Andrey Korkunov has chosen the perfect moment to sell his chocolate business as his company started losing its share of the market last year.
Photo: Alexey Kudenko
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Wrigley Buys Korkunov Chocolate Maker
Wrigley will buy 80 percent in the Korkunov chocolate maker for $300 million, the world’s largest chewing gum producer announced Tuesday. The Korkunov factory is Wrigley’s first chocolate asset. Industry experts say the timing was perfect for Mr. Korkunov to sell his factory as the company’s market share slipped last year.
The Wm. Wrigley Jr. Company will buy 80 percent of stocks in the Odintsovo confectionary factory (Korkunov) for $300 million, the American company said in a statement on Tuesday. The deal may be finalized in spring, Wrigley’s Russian office told Kommersant. The factory’s co-owners, Andrey Korkunov, who gave the brand his name after founding the company in 1999, and Sergey Lyapuntsov will hold the remaining 20 percent of the stocks for two years and will stay on to manage the firm.
Industry expert consider the sum of the deal, which is unprecedented for Rusia, quite realistic. “Korkunov is the leader of the segment, and it had a lot of other offers,” Andrey Nikitin from the Uralsib investment company says. Food giants Kraft and Dirol Cadbury were among those who eyed Korkunov.
Wrigley accounts for 60 percent of chewing gum sales in the United States, and 50 percent of the sales worldwide. The American firm controls 70 percent of the Russian chewing gum market with a factory in St. Petersburg. The company’s net profits is $517 million with the total assets estimated at $4.4 billion.
Korkunov manufactured 10.5 tons of products in 2005, including bars and boxed and loose chocolates. Its estimated sales came to $100 million last year.
Korkunov will become Wrigley’s first chocolate making asset, Maxim Grishakov, head of Wrigley’s Moscow office, told Kommersant. The company officials do not explain why they chose Korkunov to start the expansion on the chocolate market. “ We have always said we would enter the chocolate segment of the total confectionery business if the right opportunity to create value for the Wrigley Company became available – and this acquisition presents such an opportunity,” Bill Wrigley Jr., Wrigley’s executive chairman, said.
Experts underscore that Russian chocolate market is lucrative and growing. In 2006, chocolate consumption in Russia grew 15 percent. The Russian $3.5 billion market is expected to grow to $4.24 billion by 2010. Apparently, Alexander Korkukov has chosen the perfect time to sell his chocolate business. “The timing for the sale was very good because Korkunov’s sales may start stagnating very soon,” Irina Eldarkhanova, chair of the BOD at the Konfael chocolate maker, says. Korkunov’s share in the Russian premium chocolate segment fell to 33.7 percent from 42.2 percent in January-September 2006.
www.kommersant.com
All the Article in Russian as of Jan. 24, 2007
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