Kellogg Wins Pringles After Diamond Deal Falls Apart
Kellogg was interested in Pringles last year, but it felt hard-pressed to compete with the lesser tax bill that would accompany Diamond’s bid, Mr. Bryant of Kellogg said in an interview.
With the collapse of Diamond’s offer, Kellogg and Procter & Gamble cobbled together a deal within a matter of days, Mr. Bryant said. “It’s an exciting asset and an iconic brand,” he said. “We moved very quickly.”
The deal is expected to close by the end of June.
The move will nearly triple Kellogg’s overseas snacks business. Kellogg executives expect Pringles to add 8 cents to 10 cents to its earnings for each share this year, excluding costs related to the deal. They also hope to achieve at least $10 million in cost savings this year, a number that they expect to increase.
Investors appeared to applaud the deal, pushing shares of Kellogg up 5.1 percent to $52.87, on Wednesday.
“The company already has a dominant position in the snacks category, including fruit snacks, granola bars, cookies, crackers, etc.,” analysts with Stifel Nicolaus wrote in a research note. “Pringles will simply add to this dominant market share position in these important growth categories.”
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