updated 7/10/2006 11:34:32 AM ET 2006-07-10T15:34:32

Kraft Foods Inc., the world’s second-largest food company behind Nestle SA, said Monday it will pay about $1.07 billion to acquire the Spanish and Portuguese units of United Biscuits in a move to broaden its global strength in cookie sales.

The company also will reclaim the rights to all Nabisco trademarks, including Oreo and Ritz, in the European Union, Eastern Europe, the Middle East and Africa as part of the transaction. United Biscuits had held the Nabisco rights, which were originally Kraft’s, since 2000.

The acquisition comes with the company expected to be spun off as an independent company this year or next by majority owner Altria Group Inc., and two weeks after Kraft named Irene Rosenfeld to replace Roger Deromedi as CEO.

The deal, expected to close in the third quarter, also includes rights to United Biscuits’ local biscuit brands and the company’s Iberian businesses and all seven plants and 1,300 staffers in Iberia.

Kraft said the transaction will significantly expand the scope of Nabisco brands.

“With our broader portfolio of strong trademarks, we look to achieve even faster growth in this key category,” said Hugh Roberts, president of Kraft’s international commercial division.

The deal is being financed by about $548 million in debt plus $522 million of the value for the redemption of Kraft’s outstanding investment in United Biscuits, which is primarily deep discount securities.

The deal is expected to help Kraft earnings by about 2 cents during the first year.

Kraft had $34 billion in sales last year.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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