Kellogg has agreed to sell its Keebler and Famous Amos businesses to Ferrero for $1.3 billion
Kellogg agreed to sell its Keebler and Famous Amos brands, as well as its fruit snacks business, to Ferrero for $1.3 billion.
The deal is expected to close by the end of July, the companies said in a statement on Monday.
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Kellogg agreed on Monday to sell a collection of businesses to Italian chocolate maker Ferrero for $1.3 billion, according to a statement from the company.
The businesses include Keebler, Famous Amos, and several smaller ones, which include fruit snacks and cookies manufactured for Girl Scouts of the USA. The businesses had total net sales of nearly $900 million and operating profit of approximately $75 million for 2018, implying a multiple of over 17 times pre-tax earnings.
"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," Steve Cahillane, Kellogg's chairman and chief executive officer, said in the statement.
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He continued: "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 deal comes amid Ferrero's aggressive expansion into the US over the past few years. While the privately held company first bought Tic Tac mints in 1969, it has stepped up its expansion plans with purchases of Ferrara Candy Company for $1 billion and Nestle's candy business — which includes Crunch and Butterfinger chocolate bars — for $2.8 billion.
Kellogg, on the other hand, has been paring back its businesses as consumer tastes shift away from sugar-based cereals. The company has also moved toward private-label products. The company's 2018 sales of $13.5 billion are down nearly 10% from a peak in 2013.
Kellog was up 1% in pre-market trading and is up 2% year to date.
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