Baking&Snack - March 2012 - 15

IN BRIEF
Kellogg to emerge as No. 2 global snack player
With the acquisition of the Pringles snack business, The Kellogg Company will become the world’s second-largest savory snack business, helping the Battle Creek, MI-based company achieve one of its goals to be a global player in that category. In February, Kellogg entered into an agreement with Procter & Gamble, Cincinnati, OH, to acquire the Pringles snacks business for $2.7 billion in cash. According to Euromonitor International, Pringles racks up global sales of $1.5 billion annually, and its products are sold in more than 140 countries. The snack operation operates manufacturing facilities in North America, Europe and Asia. Kellogg and P&G expect to complete the transaction this summer after receiving standard regulatory approvals. P&G had previously agreed to sell the Pringles business to Diamond Foods, Inc., San Francisco, CA. However, the companies terminated the deal shortly after Diamond Foods ousted its CEO and CFO 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. Diamond Foods also has been under investigation by the US Department of Justice and the US Securities Exchange Commission. Kellogg said the acquisition provides a new source of growth for the company’s US snacks business. Internationally, the company views Pringles as a platform from which Kellogg may more aggressively leverage its brands. Grupo Bimbo SAB de CV, Mexico City, Mexico, sold $391 million 6.83% bonds with a 6.5% maturity, which the company said it will use to refinance existing debt. Nonni’s Foods LLC, Tulsa, OK, acquired THINaddictives Almond Thins from V.I.S., Inc., St. Laurent, QC. SunRidge Farms, Pajaro, CA, finished its solar panel expansion for the company’s 30th anniversary. The 2,500 solar panels will supply 25 to 40% of the company’s energy needs. The California Raisin Marketing Board, Fresno, CA, began accepting entries for the 2012 America’s Best Raisin Bread Contest. Applications will be accepted through July 15. Preliminary judging will take place in August, and the final bake-off and award ceremony will be held Oct. 11-13 at AIB International in Manhattan, KS. The Flax Council of Canada, with sponsorship from Glanbia Nutritionals, updated the Flax Research Database for Human Health and Nutrition. The dataset includes peer-reviewed publications available on commonly used scientific search sites. The council added nearly 120 publications since its last update in mid-2009. A M King Construction, Charlotte, NC, won “Best Project — Private Sector, Building” in the 2011 Design Build Institute of America (DBIA) Southeast Region’s 12th Annual Design Build Competition for the Automatic Rolls of North Carolina plant in Clayton, NC. CHS, St. Paul, MN, acquired Solbar, an Ashod, Israel-based supplier of specialty soy proteins and soy isoflavones. Financial details of the transaction were not disclosed.

Kellogg’s anticipates international expansion

The acquisition of the Pringles salty snack business from Procter & Gamble Co., Cincinnati, OH, will energize the expansion of The Kellogg Company, Battle Creek, MI, into international markets, top Kellogg executives said in a presentation before the Consumer Analyst Group of New York. “It is easier to break into emerging markets with savory snacks than trying to change breakfast habits, said John A. Bryant, presi” dent and CEO. Mr. Bryant painted the Pringles acquisition as a natural step in Kellogg’s progression as a snack company. From a modest presence in snacks in the 1990s, the snack business boomed from less than $1 billion in sales to nearly $4 billion with the acquisition of The Keebler Co. in the 2000s. However, the snack business still was overwhelmingly a domestic business, Mr. Bryant said. “Pringles will change that, he said. “Kellogg will have annual ” sales of over $6 billion globally in snacks. Our international snacks business will triple in size with improved geographic coverage. ” Following the acquisition, snacks and cereal each will account for about 40% of total company sales, Mr. Bryant said. Paul Norman, Kellogg’s senior vice-president and president of Kellogg International, said the acquisition will triple Kellogg’s snack business in Europe. In the Asia Pacific, Pringles is larger than Kellogg’s current total business there. While the $2.7 billion price tag equates to a multiple of 11.7 times EBITDA, Mr. Bryant said 9 is a more accurate multiple when certain tax benefits are taken into consideration. In addition, he said $500 million will be paid with funds held outside the US.

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March 2012 / Baking & Snack / 15

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Baking&Snack - March 2012

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