TORONTO -- Candy manufacturer William Neilson Ltd. said Tuesday it is purchasing competitor Cadbury Schweppes Canada Inc.'s Canadian confectionery operations and plans to close the company's plant within a year.
Purchase price in the deal, which included a long-term license for Cadbury trademarks, was not disclosed.
A spokesman for Neilson said the deal, expected to close Feb. 12, involved 'a cash purchase of assets' the value of which also was not disclosed.
Neilson said it did not purchase the Fry's cocoa and Cadbury hot chocolate business, which will continue to be operated by Cadbury.
Neilson said the purchase agreement would be subject to review by the Canadian Competition Tribunal.
'We've known for a long time that our long-term profit projections were not really encouraging,' said Cadbury Canada President Martin Pearce. 'This deal will help both companies substantially.'
He said Neilson's Canadian market share would be boosted and the company would have a significant portion.
Neilson president David McMillan said that based on a preliminary study of market conditions, Neilson plans to close Cadbury's plant in Whitby, Ontario, about 25 miles east of Toronto, within a year.
Many employees will be offered employment with Neilson, Pearce said.
Cadbury's confectionery division employs 450 people and the Whitby plant turns out about 200 million candy bars a year.
Toronto-based Neilson, purchased by George Weston Ltd. in 1947, manufactures chocolate, ice cream and grocery and milk products. Among its products are the Eskimo Pie and Jersey Milk, Crispy Crunch, Sweet Marie and Mr. Big bars.
Cadbury, an ultimate subsidiary of Cadbury Schweppes PLC of London, is best known for the Caramilk, Dairy Milk, Crunchie, Snack Bar and Gold bars.
Financial details of the companies were not available.
Analyst Neil Wickham of Walwyn Stodgell Cochran Murray Ltd. said Neilson was a profitable company although its Toronto plant is not operating at capacity.
He said Neilson may decide to move some or all of Cadbury's production to its own plant to boost volume with products already selling well.
'If you've got any kind of manufacturing plant that's running at a low level of capacity, you buy some more sales to get your capacity level up,' Wickham said. 'They were complaining that the chocolate bar business was very competitive and they weren't making nearly as much money as they thought they could.'
Cadbury's Caramilk was ranked fourth in 1985 in terms of candy bar sales in Canada, while its Crunchie bar was ranked 11th. Neilson's Crispy Crunch, the company's best seller, was ranked seventh.
