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. Last Updated: 07/27/2016

Suchard Buys Out Candy Firm

BUCHAREST -- Swiss confectionery maker Kraft Jacobs Suchard has bought out a Romanian chocolate manufacturer in a $21.4 million deal, officials said.


Suchard took 82 percent of Poiana SA for $4.4 million and would invest $17 million to upgrade and expand it, they said.


"We sold our entire 70 percent stake in Poiana SA to Kraft Jacobs Suchard, who also bought a 12 percent stake from the Private Ownership Fund," Marin Badea, a spokesman of the State Ownership Fund, said last week.


The State Ownership Fund holds a majority 70 percent stake in 6,000 or so state firms earmarked for gradual privatization under a 1991 denationalization law. The Private Ownership Fund has the other 30 percent.


Privatization is a plank of market-economy reforms launched in Romania after the 1989 collapse of communism.


It was the State Ownership Fund's second such sale to a foreign company.


Last year, it sold its 70 percent stake in a garments maker to an Israeli investor for around $2 million, Badea said.


"Investment of $17 million is considered minimum investment. We are ready and willing to invest more," Kraft Jacobs Suchard vice president Bernhard Huber said.


The money, to be injected over the next five years, would be used to upgrade the chocolate factory and boost its capacity to at least the initial level of more than 21,000 tons a year.


Kraft Jacobs Suchard would pump in the first $2 million in the next 20 days.


Poiana SA, one of five candy makers in Romania, is a medium-sized company.


It produces around 12,000 tons of candy a year, 24 percent of Romania's output, company manager Dagmar Cazac said.


"We used to work at capacity before 1989, but afterwards we saw our output halved and the quality of our products slip. A solid foreign investor was the obvious solution," Cazac said.


Poiana SA, based in the Transylvanian city of Brasov, 200 kilometers north of Bucharest, would now be called Kraft Jacobs Suchard Romania Brasov.


It employed 1,200 people last year and would keep its workforce at this level for at least another year, she said.


Factory employees would be able to buy the remaining 18 percent stake in the company in a worker-management buyout. "Our first priority is the domestic sweets market, where we will try to develop quality products at reasonable prices," Huber said.


Kraft Jacobs Suchard would think of exports and of expanding in other areas such as coffee later.


The Zurich-based company was created in 1993 by the merger of Kraft General Foods Europe and Jacobs Suchard AG as part of Philip Morris Companies Inc.