Sector News

Kellogg to sell range of snack brands to Ferrero for $1.3bn

April 1, 2019
Food & Drink

Kellogg Company has agreed to offload its cookies business and a range of fruit and fruit-flavoured snacks, pie crusts, and ice cream cone brands to Ferrero Group for approximately $1.3 billion.

Kellogg announced in November 2018 that is was exploring the sale of its cookies and fruit snacks businesses so it could focus on its core operations.

The proposed sale comprises a significant portion of Kellogg’s North American snacks business, and includes the entirety of Kellogg’s North American cookies unit, which is composed of brands including Keebler, Mother’s, Famous Amos and cookies manufactured for the Girl Scouts of the USA.

According to Kellogg, the combined operations of the businesses included in the transaction recorded net sales of nearly $900 million and operating profits of approximately $75 million in 2018.

The transaction is subject to regulatory approval, and it is expected to be completed by the end of July 2019.

Production facilities located in US cities including Augusta, Georgia; Florence, Kentucky; Louisville, Kentucky; Allyn, Washington; and Chicago, Illinois are also included as part of the deal.

This agreement does not affect the rest of Kellogg’s North American snacks business, which includes brands selling products such as crackers, salty snacks and toaster pastries.

Steve Cahillane, Kellogg’s chairman and CEO, said: “This divestiture is yet another action we have taken to reshape and focus our portfolio, which will lead to reduced complexity, more targeted investment, and better growth.

“Divesting these great brands wasn’t an easy decision, but we are pleased that they are transitioning to an outstanding company with a portfolio in which they will receive the focus and resources to grow.

“On behalf of our entire company, I want to thank the many employees who support these businesses and have contributed to the strength of these brands.

“We appreciate their passion, commitment and everything they have done for Kellogg. These talented individuals are going to a first-class organisation in Ferrero, where they undoubtedly will thrive.”

The transaction further strengthens Ferreros presense in the US market, following the company’s purchase of Nestlé’s US confectionery unit for $2.8 billion last year.

By Martin White

Source: FoodBev

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