Mondelez to Buy 80% Stake in Vietnamese Snack Company - Analyst Blog

Mondelez International, Inc. (MDLZ) recently announced its plans to buy majority stake in Vietnam's leading confectionery company, Kinh Do Corporation's snacks unit for $370 million.

However, before Mondelez goes ahead with the investment, Kinh Do will carry out the planned restructuring to bring the snacks business under one unit — BKD. Mondelez will have the option to buy the remaining shares of BKD a year after the completion of the initial purchase of 80% stake.

The deal will expand Mondelez's presence in the fast growing Asian market by using the former's distribution network. The deal will add Kinh Do's popular brands such as Kinh Do moon cakes and biscuits, Cosy biscuits and Solite soft cakes to Mondelez's snacks portfolio which boasts brands like Oreo cookies and Cadbury chocolates.

The deal, subject to Kinh Do shareholders' approval, is expected to close in the second quarter of 2015.

Mondelez has been regularly expanding its business through acquisitions. Its two major acquisitions — LU biscuit business in 2007 and Cadbury in 2010 — significantly expanded its routes-to-market around the globe, especially in Europe and emerging markets. In the first quarter of 2013, the company acquired the remaining interest in a biscuit operation in Morocco, now a wholly owned subsidiary. The company plans to pursue further takeovers, mainly in developing countries, to gain scale in its categories or distribution capabilities.

Mondelez, which carries a Zacks Rank #3 (Hold), was previously known as Kraft Foods, Inc. It changed the name following the spin-off of its North American grocery business into a separate independent company, Kraft Foods Group, Inc. (KRFT), in Oct 2012.

Other Stocks to Consider

Some better-ranked food companies are ConAgra Foods, Inc. (CAG) and McCormick & Company, Inc. (MKC).Both the stocks have a Zacks Rank #2 (Buy).