US-based breakfast cereal maker Kellogg announced today it plans to sell its cookies and fruit snack brands, including Keebler and Famous Amos, to Italian confectionery group Ferrero for $1.3 billion.
The businesses generated sales of about $900 million in 2018, the company said in a release. Also adding that the all-cash transaction is expected to close by the end of July.
“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’s Chairman and CEO. “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.”
Like many other packaged food companies, Kellogg has struggled to adjust as consumer tastes change and many shoppers move away from packaged food. Last year the company first announced it was exploring a sale of the snacks businesses as part of its strategic plan.
“On behalf of our entire Company, I want to thank the many employees who support these businesses and have contributed to the strength of these brands,” Cahillane added. “We appreciate their passion, commitment and everything they have done for Kellogg. These talented individuals are going to a first-class organization in Ferrero, where they undoubtedly will thrive.”
Ultimately, Nutella-parent company Ferrero beat out lead contender Hostess Brands for the Kellogg cookie assets. As part of the agreement, Ferrero will acquire six US food manufacturing facilities across the US, plus a leased facility in Baltimore.
“Kellogg Co.’s cookie, fruit snack, ice cream cone and pie crust businesses are an excellent strategic fit for Ferrero as we continue to increase our overall footprint and product offerings in the North American market,” Giovanni Ferrero, Executive Chairman of the Ferrero Group, said in a statement.
The deal is the latest in a string of acquisitions for Ferrero as the company looks to diversify well-established products that include Kinder Chocolate, Ferrero Rocher and Tic Tac.
Last year, Ferrero agreed to buy Nestlé USA’s chocolate confectionery business, owner of the Butterfinger and Baby Ruth brands, for $2.8 billion. The company also expressed interest in buying Campbell Soup Company’s international business, which includes its biscuits and snacks operations.
“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,” said Lapo Civiletti, CEO of the Ferrero Group.
The past few years have been a tumultuous time for packaged food giants, as health-conscious consumers move away from high-sugar and processed foods. In fact, as far back as 2015, research firm Catalina reported that 90 of the top 100 brands in consumer-packaged goods had lost market share.
The Corn Flakes-owner bought Keebler in 2001 for $4.4 billion.
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