Kraft Buys Candy Maker for $1.5 Billion

OSLO, Norway —  Kraft General Foods expanded its presence in Europe’s candy and snack food business Monday, spending $1.5 billion to snatch a Scandinavian candy maker from under the nose of rival Hershey Food Corp.

The Philip Morris Cos. unit said it is buying Freia Marabou for $1.5 billion.

Freia Marabou, jointly owned by Norwegian and Swedish companies, is Scandinavia’s leading chocolate and snack food maker. It is 41%-owned by Norsk Hydro, a $10-billion energy concern, and 18.5%-owned by Hershey.

The buyout is the largest in Norway’s history.

Shares of Freia Marabou were suspended on Norway’s stock exchange, where they had been trading at $51. The offer is worth $77.

Philip Morris closed up 12.5 cents a share at $85.375 on the New York Stock Exchange.

The agreement was a setback for Hershey, which only last May bought its stake in the candy company for $180 million. Hershey, based in the Pennsylvania town of the same name, said it had also bid to take over Freia Marabou. It said its offer of $68 a share was rejected.

An analyst who requested anonymity said the rejection of Hershey’s bid frustrated some investors’ hopes that Hershey might use its Freia investment to strengthen its relatively weak international presence.

“However it is indicative of management’s conservative nature that they were not willing to pay more than their set limits to make such an acquisition,” the analyst said.

Hershey stock nonetheless jumped $1.125 a share to $45.50 on the New York Stock Exchange.