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Mondelez to separate cheese & grocery business in Europe

By Devika Krishna Kumar

(Reuters) - Mondelez International Inc, maker of Cadbury chocolate and Oreo cookies, said it would create a "stand-alone" European cheese and grocery business to focus on its fast-growing snacks business, including biscuits, gum and candy.

Mondelez shares were up 1.3 percent at $38.49 in afternoon trading on the Nasdaq.

The company has been increasing its focus on its portfolio of snack foods and refreshments, which includes 53 brands that each generated annual revenues of $100 million or more in 2013.

"Given the impact of the coffee transaction on our European operations, we've decided to create a predominantly stand-alone cheese and grocery category in Europe," Mondelez spokesman Mike Mitchell said in an e-mail.

Mondelez and rival D.E Master Blenders 1753 said in May they would merge their coffee businesses in a deal aimed at taking on market leader Nestle SA.

A stand-alone cheese and grocery category would likely have a dedicated sales team to focus on selling products exclusively, rather than a full array of products across categories, Mitchell said.

The segment would be managed independently. The European cheese and grocery business' president will report to the president of Mondelez Europe.

The company expects its European business to be 90 percent snacking-focused after the coffee deal with Master Blenders, Mitchell said.

The cheese and grocery segment accounted for about 10 percent of European sales for the quarter ended March 31.

Mondelez has come under pressure from activist investors Nelson Peltz and Ralph Whitworth. Peltz urged Mondelez last year to sell itself to beverage and snacks giant PepsiCo Inc, but Pepsi balked at such a deal.

Bloomberg reported that the separation of the cheese and grocery business in Europe could lead to a spinoff or a sale, citing a source familiar with the matter. (http://bloom.bg/1kLXXr8)

(Additional reporting by Siddharth Cavale in Bangalore; Editing by Joyjeet Das)

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