Kellogg completes $2.69bn acquisition of Pringles

US-based cereal maker Kellogg has completed the acquisition of potato and wheat-based snacks brand Pringles from Procter & Gamble (P&G) for $2.69bn, a strategy that will enable the cereal maker to expand its global footprint and strengthen its snack business.

According to Kellogg, the deal complements its existing snacks brands such as Keebler, Cheez-It and Special K Cracker Chips – nearly tripling the size of its international snacks business, and gives it control over two manufacturing plants in Tennessee, US, and Mechelen, Belgium.

Kellogg president and CEO John Bryant said that through the acquisition, the company gains manufacturing plants, an iconic brand and a platform for growth.

"The addition of Pringles to our portfolio significantly advances the company’s strategic goal of building a global snacks business on par with our global cereal business, and expanding our global footprint," Bryant added.

With the completion of the acquisition, the Pringles workforce including the manufacturing resources in the US and Belgium will transfer to Kellogg.

P&G noted that it expects an after-tax gain on the deal in the range of $1.4bn to $1.5bn, or approximately $0.47 to $0.50 per share.

P&G had earlier agreed to sell Pringles to Diamond Foods for $2.35bn in April 2011, but was later forced to re-evaluate the agreement after Diamond began facing criticism over questionable payouts to its walnut farmers.

The agreement was terminated in February 2012 after Diamond said that it needed to restate its financials for 2010 and 2011 and put its chief executive and chief financial officer on administrative leave.

P&G, which will be completely exiting the food business after divesting the Pringles brand, plans to focus on beauty and personal care products.

Pringles is a leading brand in the savoury snacks segment, with sales of about $1.5bn across more than 140 countries.

The brand, which features saddle shape and distinct canister packaging, offers more than 80 flavours of potato and wheat-based snacks.

This is the second largest acquisition for Kellogg, after Keebler, which was acquired for $3.86bn in 2000.

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Image: Kellogg’s acquisition of Pringles complements its existing snacks brands and will nearly triple the size of its international snacks business. Photo: P&G.