BATTLE CREEK, MICH. — The Kellogg Co. has entered into an agreement with Procter & Gamble, Cincinnati, to acquire the Pringles snacks business for $2.7 billion in cash. The companies anticipate finalizing the transaction this summer after standard regulatory approvals are received.
Procter & Gamble said the agreement to sell the Pringles business to Diamond Foods, Inc., San Francisco, was mutually terminated by both companies. The announcement of Kellogg’s acquisition comes shortly after Diamond Foods ousted its chief executive officer and chief financial officer and announced it would be restating its earnings for fiscal 2010 and 2011 after an internal investigation found accounting irregularities related to crop payments made to walnut growers.
In the United States, Kellogg said the acquisition provides a new source of growth for the company’s snacks business. Internationally, the company views Pringles as a platform from which Kellogg may more aggressively leverage its brands.
“Pringles has an extensive global footprint that catapults Kellogg to the No. 2 position in the worldwide savory snacks category, helping us achieve our objective of becoming a truly global cereal and snacks company,” said John Bryant, president and c.e.o. of Kellogg. “We are delighted to welcome the employees of the Pringles organization to Kellogg. Their collective passion and commitment has resulted in Pringles’ well-deserved acclaim as one of the most recognized brands in the world.”
Pringles is the second largest savory snack business in the world, with sales of $1.5 billion, according to Euromonitor. Its products are sold in more than 140 countries and it has manufacturing operations in North America, Europe and Asia.
Procter & Gamble said it expects an after-tax gain on the transaction in the range of $1.4 billion to $1.5 billion, or approximately 47c to 50c per share, approximately the same as was estimated at the time of the initiation of the original transaction with Diamond Foods in April 2011.