Thursday, February 16, 2012

Kellogg Buys Pringles

Cereal brand Kellogg is buying Procter & Gamble product Pringles for $2.7 billion.

P&G Chairman and CEO Bob McDonald believes that Kellogg will be able to take care of the brand as they share similar values and principles.

The decision by Kellogg is primarily motivated by their recent decision to further expand their growing snack line which currently has Keebler, Cheez-it, and Special K crackers.

The deal between the two companies is expected to wrap up by summer.

After which, Kellogg would then have a diluted 2012 EPS and go between 11 and 16 cents and it is expected that the company will incur one-time costs of around $160 to $180 million.

From the past couple of years, the global snack market has been changing dramatically. Kraft, for example, had redesigned Oreo, Cadbury, Milka, Tang, and Trident products to fit the emerging U.S. market demand. Even PepsiCo tried to expand to healthy snacks with Quaker granola bars and baked Frito-Lays potato chips.