Kellogg Co. today announced that it has entered into an agreement to acquire Procter & Gamble's Pringles business for $2.7 billion. The acquisition advances the company's goal of building a global snacks business on par with its global cereal business.
Kellogg has established a strong U.S.-based snacks business since its successful acquisition of Keebler more than a decade ago. With the acquisition of Pringles, the company will build a truly global snacks platform and organization for further growth.
Highlights of the acquisition include:
Pringles' brand strength and consumer appeal fit well with Kellogg's core strengths in brand-building and innovation, adding a complementary product to its high-quality snacks brands, most notably Keebler, Cheez-It and Special K Cracker Chips.
In the U.S., the acquisition provides a new source of growth for the company's already strong presence in the snacks category.
Internationally, Pringles provides a strong brand and an established platform from which Kellogg can more aggressively leverage its brands in the international snacks category.
-- Kellogg will benefit from the collective expertise of more than 1,700 talented Pringles employees. The similar heritage, culture and values of Kellogg and P&G are expected to facilitate a smooth transition.
The companies expect to complete the transaction in the summer of 2012, pending necessary regulatory approvals.
"We are excited to announce this strategic acquisition," said John Bryant, Kellogg Company's president and chief executive officer. "Pringles has an extensive global footprint that catapults Kellogg to the number two position in the worldwide savory snacks category, helping us achieve our objective of becoming a truly global cereal and snacks company. We are delighted to welcome the employees of the Pringles organization to Kellogg. Their collective passion and commitment has resulted in Pringles' well-deserved acclaim as one of the most recognized brands in the world."
P&G's Chairman, President and Chief Executive Officer, Bob McDonald, added, "This is an excellent development for P&G, Pringles and Kellogg, creating value for our shareholders and representing an outstanding opportunity for Pringles employees with a leading company in the Food sector. Kellogg shares similar values and principles to us and we are confident that the Pringles business will thrive under Kellogg's leadership."
Pringles is the world's second largest player in savory snacks(1), with $1.5 billion in sales across more than 140 countries and manufacturing operations in the U.S., Europe and Asia. The stacked potato crisp has been a mainstay in supermarket snack aisles for more than four decades and is immediately identified by snack lovers worldwide by its unique saddle shape and distinct canister packaging.
The Pringles business enhances Kellogg's existing production capabilities with the addition of two world-class manufacturing facilities, one in Tennessee and one in Belgium.
Kellogg has agreed to pay Procter & Gamble $2.695 billion in cash for the Pringles business. This is before significant future tax benefits.
As a result, Kellogg anticipates increasing its outstanding debt by approximately $2 billion, and expects to limit its share repurchase program to proceeds received by the company from employee option exercises for approximately two years to allow the company to reduce the increased levels of debt.
Most Popular Stories
- Dell Offers Undisclosed Number of Employee Buyouts
- Saab Gets Back into the Game; U.S. Auto Sales Soar
- Authorities Close to Deal with JPMorgan Chase over Madoff Response
- Apple Activates Customer-Tracking iBeacon
- 2013 Tech Gift Guide: iPad Mini Still Hot; Chromecast a Great Low-Cost Option
- U.S. Stocks Rise on Sysco Acquisition
- A Biography of Jonathan Ive, Apple's Creative Chief
- American Airlines, US Airways Complete Merger
- Unemployed Wait as Lawmakers Debate
- Tech Giants Call for Controls on Government Snooping