Hershey Foods Announces Agreement to Sell U.S. Pasta Business

Hershey Foods Corp., (Hershey, PA) and New World Pasta, LLC, today announced that they have signed a definitive agreement providing for the acquisition of Hershey's U.S. pasta business by New World. As a result of the transaction, Hershey will receive $450 million in cash and will retain a minority interest in the business.

The transaction is to include the American Beauty, Ideal by San Giorgio, Light 'n Fluffy, P&R, Mrs. Weiss, Ronzoni, San Giorgio and Skinner pasta brands, along with six manufacturing plants. In 1997, combined sales for Hershey's pasta business were approximately $400 million.

"Hershey Foods has been involved in the pasta business since 1966. Over the years, this business has provided profitable growth and good cash flow for the corporation," said Kenneth Wolfe, chairman and CEO of Hershey Foods. "However, after a thorough review of our strategic direction, we have concluded that we can generate a better return for our shareholders by focusing our resources on our confectionery and related grocery and foodservice businesses,"

New World has indicated that it plans to locate the headquarters for the pasta business in the central Pennsylvania area. As part of the transaction, Hershey and New World have agreed that all of the current pasta employees will be offered employment by New World. The transaction is subject to any necessary regulatory approvals and is expected to close by the end of January 1999.