On April 1, 2019 Kellogg Company announced it had reached a definitive agreement to sell selected cookies, fruit and fruit-flavored snacks, pie crusts and ice cream cones businesses to global confectioner Ferrero Group. The sale includes Kellogg brands Keebler, Mother’s, Famous Amos, Murray’s, and Murray’s Sugar Free and cookies manufactured for Girl Scouts of the U.S.A. The transaction includes production facilities in Augusta, Georgia; Florence, Kentucky; Louisville, Kentucky; Allyn, Washington; and Chicago, Illinois.
The cash transaction is valued at $1.3 billion and is subject to customary closing conditions, including any applicable regulatory approvals. It 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,” said Steve Cahillane, Kellogg’s Chairman and CEO. “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,” Cahillane said.
In 2018, the businesses Kellogg has decided to part with recorded net sales of nearly $900 million and operating profit of approximately $75 million, 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 percent 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.
“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,” Cahillane added. “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,” he said.