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. Last Updated: 07/27/2016

Wrigley Bites Into Korkunov Candy

The Wm. Wrigley Jr. Company will buy 80 percent of chocolate maker A. Korkunov for $300 million, the world's largest chewing gum producer announced Tuesday.

With estimated sales of $100 million last year, Korkunov is the seventh-largest player in the country's chocolate market, which is worth $3.7 billion, Wrigley, the maker of Wrigley's gum, said in a statement.

Korkunov is the world's No. 2 premium boxed chocolate maker, Wrigley said. "It is also the only native Russian brand with an awareness level on par with those of leading global consumer goods brands -- such as Sony, Gillette and BMW -- according to the Young & Rubicam 'Power Brand' ranking," Wrigley said. Wrigley will buy the remaining 20 percent "over time," it said.

Korkunov's rise to major player in the world chocolate market mirrors that of founder Andrei Korkunov, a former defense engineer who went into business after his factory shut down in the 1990s.

Like most entrepreneurs in the heady 1990s, Korkunov made money on anything that he could sell -- from jeans to iron.

His interest in chocolate developed after business partners from the Czech Republic paid him with truckloads of chocolate, which he had to convert into money.

After the chocolate sold well, he moved into the confectionery business full time, Korkunov said in a 2001 interview with The Moscow Times.

Korkunov originally sought to build a chocolate factory together with an Italian company, Witters, but the foreign investors bailed out in the wake of the 1998 financial crisis before the work was complete.

The A. Korkunov group now owns a factory in the suburb of Odintsovo, west of Moscow, and a distribution company called Premium Foods.

Korkunov spokeswoman Ilona Tarasova confirmed the deal and said the current management would stay on at the company for the time being. Executives staying on at the firm include Andrei Korkunov, who gave the brand his name after founding the company in 1999 with another Russian partner, Sergei Lyapuntsov, she said. She had no other comment.

"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 in the statement.

Russia is one of Wrigley's top-priority markets and the purchase is expected to drive new growth, he said.

The acquisition will be funded from cash and a modest component of debt, Wrigley said. It expected Korkunov "to have a positive impact on its business, although not initially significant due to the relative size of the transaction."

"Wrigley looks for the deal to increasingly add to top-line growth and bottom-line results over time, as the company invests in and expands operations ... of this new aspect of its product portfolio," it said in the statement.

Wrigley came to the Russian market in 1991 and built a chewing gum factory in St. Petersburg in 1999.

Korkunov manufactured 10.5 tons of products in 2005, including bars and boxed and loose chocolates, Interfax reported. It planned to increase production by 20 percent in 2006 but has not yet released results for the year.

Korkunov chocolate is made on Italian equipment bought from OPM, the major supplier to Italy's Ferrero, producer of Rafaello, Kinder Surprise and other candies.

Last summer, Korkunov voiced his intention to go into the development business, Interfax said.