Sector News

Kellogg to buy Latin American food maker

October 14, 2016
Consumer Packaged Goods

Kellogg Co. is buying a maker of Latin American snacks for 1.38 billion Brazilian reais (US$429 million), as it continues to expand into emerging markets.

Because of the all-cash deal, Kellogg is cutting its planned share-buyback plan. It now expects to repurchase between $450 million to $550 million worth of shares, compared with previous guidance of between $700 million and $750 million.

Kellogg is buying Ritmo Investimentos, the controlling shareholder of Parati SA, Afical Ltda and Pádua Ltda, known as the Parati Group. Kellogg said the move aligns with its goals of becoming a global snacking giant and expanding its presence in emerging markets. It is Kellogg’s fourth emerging-market acquisition in the past two years.

Brazil-based Parati makes regional food brands including Parati, Pádua, Minueto, Zoo Cartoon and Hot Cracker biscuits. It also makes Trink powdered beverages, Parati Lamen instant noodles and Parati dried pasta.

Parati revenue is expected to be about BRL600 million (US$190 million) and the deal is expected to close by the end of the year.

Parati has 3,200 employees, including a sales force of about 1,300 people serving about 60,000 customers directly. Parati has a “strong presence” in small to medium high-frequency retail stores in Brazil, which help Parati reach the country’s growing population.

With prepackaged food facing sluggish growth in the U.S., many cereal and snacking companies are heading abroad to reach increasingly urban and middle class consumers in emerging markets.

By Austen Hufford

Source: Wall Street Journal

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