Kellogg to sell cookies and snack brand businesses to Ferrero for US$1.3b

USA – Kellogg Company has announced that it has agreed to sell selected cookies business and a range of fruit and fruit-flavored snacks, pie crusts, and ice cream brands to Ferrero Group in a cash transaction valued at US$1.3 billion (€1.16 billion).

The transaction also includes brands and assets primarily related to the businesses which will then be operated by the global confectionery group and its related companies.

It involves a portion of Kellogg’s North America snacking business with brands such as Keebler®, Mother’s®, Famous Amos®, Murray’s®, and Murray’s Sugar Free®, as well as cookies manufactured for Girl Scouts of the U.S.A.

Also included in the transaction are production facilities in Augusta, Georgia; Florence, Kentucky; Louisville, Kentucky; Allyn, Washington; and Chicago, Illinois.

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

“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,” said Steve Cahillane, Kellogg’s Chairman and Chief Executive Officer. 

“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.”

The businesses under divestment recorded net sales of nearly US$900 million and operating profit of approximately US$75 million in the year 2018.

The company expects to use the proceeds from the transaction to partly reduce outstanding debt.

“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,” added Cahillane.

“We appreciate their passion, commitment and everything they have done for Kellogg. 

These talented individuals are going to a first-class organization in Ferrero, where they undoubtedly will thrive.”

Subject to regulatory and customary approvals, the transaction is expected to close by the end of July.

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