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Kellogg Company Reaches Agreement to Sell Keebler Cookies and Related Businesses to Ferrero

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Kellogg Company (NYSE: K) today announced 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 and its related companies (“Ferrero”), a global confectionary group.

The cash transaction is valued at $1.3 billion (or €1.16 billion, at current exchange rates), and includes brands and assets primarily related to these businesses.  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,” 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 divestiture represents a portion of Kellogg’s North America snacking business.  Specifically, it includes its cookies business, including brands like 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.  It also includes its fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses.  The transaction includes production facilities in Augusta, GeorgiaFlorence, KentuckyLouisville, KentuckyAllyn, Washington; and Chicago, Illinois.

In 2018, these businesses 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% 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.”

Evercore was lead advisor to Kellogg on the transaction, with Goldman Sachs acting as co-advisor.  Wachtell, Lipton, Rosen & Katz acted as legal counsel.

About Kellogg Company

At Kellogg Company (NYSE: K), we strive to enrich and delight the world through foods and brands that matter. Our beloved brands include Pringles®, Cheez-It®, Keebler®, Special K®, Kellogg’s Frosted Flakes®, Pop-Tarts®, Kellogg’s Corn Flakes®, Rice Krispies®, Eggo®, Mini-Wheats®, Kashi®, RXBAR® and more. Net sales in 2018 were approximately $13.5 billion, comprised principally of snacks and convenience foods like cereal and frozen foods. Kellogg brands are beloved in markets around the world. We are also a company with Heart & Soul, committed to creating three billion Better Days by the end of 2025 through our Breakfasts for Better Days global purpose platform. Visit www.KelloggCompany.com or www.OpenforBreakfast.com.

About Ferrero Group

Founded as a family business in Alba, Italy in 1946, Ferrero is the third-largest company in the global chocolate confectionary market, with global sales of over $12 billion, distribution across over 170 countries, and a workforce of more than 30,000 people across 55 countries.  Ferrero entered the U.S. in 1969 with Tic Tac® breath mints and is now also known for bringing U.S. families simple joy through quality products including Ferrero Rocher® fine hazelnut chocolates, Nutella® The Original Hazelnut Spread®, Kinder Joy®, and Fannie May chocolates®.

Ferrara Candy Company, a related company of The Ferrero Group, is an industry leader in U.S. confections and one of the fastest growing confections companies in the country. A passionate team of more than 4,000 employees work together to share delight in every bite through leading brands that have shaped the confections market for more than 100 years. Our diverse portfolio of nearly 35 brands includes SweeTarts®, Trolli®, Brach’s®, Black Forest®, Butterfinger®, Crunch®, Laffy Taffy® and Nerds®, along with iconic favorites like Lemonhead®, Red Hots® and Now and Later®.  Headquartered in Chicago, the company has an operational network of manufacturing, distribution and R&D facilities across North America.

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