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Ferrero seals US$1 billion cookie deal with Kellogg

Keebler Famous AmosCereal maker Kellogg has agreed to sell its well-known cookie brands, including Famous Amos, and fruit snacks business to confectionery giant Ferrero for US$1.3 billion.

As part of the deal Ferrero will acquire iconic cookie brands Keebler, Famous Amos cookies, Mother’s and Murray sugar free cookies and Little Brownie Bakers (Girl Scouts cookie supplier), as well as Kellogg’s fruit snacks business, including Stretch Island and Fruity Snacks and Keebler’s ice cream cones and pie crust products.

In 2018, these businesses recorded net sales of nearly US$900 million and operating profit of approximately US$75 million.

“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,” said Steve Cahillane, Kellogg chairman and CEO.

Cahillane said it wasn’t an easy decision to divest these brands, but is pleased that they are transitioning to an “outstanding company with a portfolio in which they will receive the focus and resources to grow”.

Giovanni Ferrero, executive chairman of the Ferrero Group said Kellogg Company’s cookie, fruit snack, ice cream cone and pie crust businesses are an excellent strategic fit for Ferrero as the company continues to increase its overall footprint and product offerings in the North American market.

“With this transaction, I look forward to bringing many iconic Kellogg brands into the Ferrero portfolio, to welcoming our new colleagues to the extended Ferrero community, and to continuing Ferrero’s strong track record of growing brands, as we have through our successful acquisitions of Fannie May, Ferrara Candy Company, and the former Nestle US confectionery business. We have great respect for Kellogg, its legacy and values, and are proud that Kellogg has chosen Ferrero as a good home for these businesses,” he said.

Ferrero will also acquire Kellogg’s six owned US food manufacturing facilities in Allyn, Washington, Augusta, Georgia, Florence and Louisville Kentucky, and two plants in Chicago, Illinois. This also includes a leased manufacturing facility in Baltimore, Maryland.

“We are acquiring a portfolio of well-established brands that consumers love, with very strong market positions across their respective categories, allowing us to significantly diversify our portfolio and capitalize on exciting new growth opportunities in the world’s largest cookies market,” Lapo Civiletti, CEO Ferrero Group, said.

The transaction is expected to be less than 5 per cent dilutive to Kellogg’s projected 2019 currency-neutral adjusted earnings per share, the company said.

Kellogg said it will retain the rest of its North America snacking businesses, which includes crackers, salty snacks, wholesome snacks and toaster pastries brands.

“The acquisition presents an exciting opportunity to advance our strategic growth objectives and we look forward to sharing our plans for the business with our customers, suppliers and other partners in the coming weeks and months, and welcoming our new colleagues from Kellogg,” Todd Siwak, CEO Ferrara Candy Company, said.

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