Kraft offers $7.2b for Danone's biscuit unit

PARIS -- Kraft Foods Inc. plans to buy Groupe Danone SA's biscuit unit for $7.2 billion to become Europe's largest maker of cookies.

Kraft, the world's second-biggest food maker, will add Danone's Petit Ecolier chocolate biscuits and TUC crackers to its own Oreo and Ritz brands. Chief executive Irene Rosenfeld, who took over in June 2006, intends to expand outside the United States and may be pushed to accelerate acquisitions by Nelson Peltz, the billionaire investor who owns 3 percent of Kraft.

Kraft, based in Northfield, Ill., "could use a boost in its growth rate," said Brooks Cullen, who helps manage $10 billion, including 1.1 million Kraft shares, at Schafer Cullen Capital Management Inc. in New York. "It never hurts to get somebody in there to stir things up a little bit."

Danone's shares rose on speculation the French company will use the cash to press expansion in healthier foods. Shares of Royal Numico NV, Europe's largest baby food maker, rose on speculation that Danone may be interested in buying the company.

Rosenfeld told analysts in February that Kraft plans to repurchase $5 billion in shares before March 30, 2009, leaving enough capital for acquisitions.

Peltz hasn't disclosed any plans he may have for Kraft. The company was spun off by Altria Group Inc., the maker of Marlboro cigarettes, in March.

Shares of Kraft fell 87 cents to $34.66 in New York Stock Exchange composite trading.