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New owner of Milk-Bone plant may unleash some new products 'We believe Milk-Bone has not fully realized its potential'

Del Monte Foods is about to get its paws on Milk-Bone, whose plant is in Buffalo, and plans to invest in the brand.

The California-based food company announced Thursday its subsidiary, Del Monte Corp., will buy Milk-Bone from Kraft Foods Global for about $580 million.

Milk-Bone, which has produced dog treats in Buffalo since 1957, employs 219 people at its local site, said Cathy Pernu, a Kraft spokeswoman. Milk-Bone also has a handful of employees at a pet food testing center in Sherburne, southeast of Syracuse, and a business team in East Hanover, N.J.

Del Monte representatives visited the Buffalo plant on Thursday, said Melissa Murphy, a Del Monte spokeswoman. Asked about any potential changes in the work force, she said: "At this point, we're not anticipating changes."

"I know that it's a strong facility that's successfully been making products there for a long time," she added. The Urban Street plant, near the Buffalo Museum of Science, is the nation's only Milk-Bone factory.

Richard Wolford, chief executive officer of Del Monte Foods, in a conference call praised Milk-Bone as an iconic brand. He said it would complement other pet food brands in Del Monte's portfolio: Kibbles 'n Bits, 9-Lives, Snausages and Pup-Peroni. Two weeks ago, the company announced it was buying cat food producer Meow Mix.

The company plans to apply its knowledge of pet food and product innovation to Milk-Bone, and might expand the number of products sold under that brand, Wolford said. Milk-Bone generated about $180 million in revenue in 2005.

"In recent years, we believe Milk-Bone has not fully realized its potential," Wolford said. "This brand was noncore and to a large extent occupied a largely stand-alone status in the Kraft portfolio.

"We believe Del Monte can bring important additional value to this brand," he said. "We expect to revitalize and invest in the brand as it becomes a core focus for Del Monte."

The company isn't planning any plant closings as its pet food products lineup grows, Wolford said.

"We do not expect to close a plant. In fact, we believe that the additional plants we have acquired will improve our overall cost structure, particularly in distribution."

For decades, Milk-Bone was part of Nabisco Holdings Corp. Six years ago, Nabisco was acquired by Philip Morris Companies. Milk-Bone has been part of Kraft, which is 85 percent owned by Altria, as the parent company of Philip Morris is now known.

"We are grateful to our employees for their commitment and dedication to the Milk-Bone brand and wish them continued success in the future," said Dave Johnson, president of Kraft North American Commercial, in a statement.

The sale of Milk-Bone still needs regulatory approval. Del Monte hopes the deal will be completed in its 2007 fiscal year, which begins in May.


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