Ferrero Takes Over the Cookie and Pies Business from Kellogg

Ferrero just announced its intention to buy Kellogg’s Keebler cookies, Famous Amos, Mother’s, Murray’s, Girl Scout cookies and fruit snacks brands for USD1.3bn. Kellogg’s revealed last year its intention to step out of the cookie business in order to focus more on its snacks and cereal businesses.

Ferrero’s portfolio also contains Nutella, Tic Tac and Ferrero Rocher chocolates among other confectioneries.

Kellogg’s reported that it has reached a definitive agreement to sell selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses to the Ferrero Group. The transaction includes production facilities in Augusta, Georgia; Florence, Kentucky; Louisville, Kentucky; Allyn, Washington; and Chicago, Illinois.

Subject to customary closing conditions, including any applicable regulatory approvals, the transaction is expected to close by the end of July.

“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,” said Steve Cahillane, Kellogg’s Chairman and CEO.

In 2018, Kellogg’s businesses recorded net sales of nearly USD900m and operating profit of approximately USD75m, including estimated indirect corporate expenses.  Assuming the cash proceeds are used only to reduce outstanding debt, the transaction is expected to be less than 5% dilutive to Kellogg’s projected 2019 currency-neutral adjusted earnings per share.

Kellogg will retain the rest of its North America snacking businesses, including its crackers, salty snacks, wholesome snacks, and toaster pastries brands.