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Kellogg’s reaches deal in order to puchase Pringles from P&G

Ace February 16, 2012 0

Kellogg, the food giant best known for its sweet tooth line like Frosted Flakes and those delicious Eggo frozen waffles, announced today the addition to would be coming on in the next few weeks.

And as of today, Kellogg became the world’s second highest savory snack maker.  The next step is spending $2.7 billion dollars in order to purchase the poato chip company from the snack band Oroctor C

But on Wednesday, it became the world’s second-biggest savory snack maker behind PepsiCo Inc.’s Frito-Lay with a $2.7 billion deal to buy the potato snack brand from Procter & Gamble.

The addition of Pringles bolsters Kellogg Co.’s cupboard of salty snacks such as Cheez-It and Keebler’s Club crackers. It also positions the company to expand at a time when the appetite for on-the-go foods is growing worldwide, particularly in emerging markets like China.

“When you have people moving to the cities and becoming urbanized, they’re less likely to eat foods they grow themselves,” said Tom Graves, an analyst for Standard & Poor’s who follows Kellogg. “There’s a bigger opportunity to sell packaged foods.”



Main Reasons for the Deal

  • Kellogg gets most of its revenue from North America, is looking for Pringles to help it expand into a global snacking company.
  • Pringles, known for its tube packaging, is sold in more than 150 countries and gets two-thirds of its $1.5 billion in annual revenue from overseas.
  • P&G wanted to sell Pringles, the last of its food businesses, to focus on its core household and consumer goods products. Kellogg was able to swoop in to buy Pringles from P&G. after Diamond Foods Inc.’s proposed $1.5 billion acquisition of the brand fell through.
  • Kellogg expects to complete the Pringles acquisition over the summer, possibly on June 30.


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