Battle Creek’s Kellogg Co. agreed Monday to sell selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses to Italy’s Ferrero Group and its related companies, a global confectionary group. The cash transaction is valued at $1.3 billion and 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,” says Steve Cahillane, chairman and CEO of Kellogg. “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 divestiture represents a portion of Kellogg’s North America snacking business and includes the Keebler, Mother’s, Famous Amos, Murray’s, and Murray’s Sugar Free brands, as well as cookies manufactured for Girl Scouts of the U.S.A. and others. The transaction includes production facilities in Georgia, Kentucky, Washington, and Chicago.
These businesses recorded net sales of nearly $900 million in 2018 and operating profit of about $75 million.
Evercore was the lead advisor to Kellogg on the transaction, with Goldman Sachs acting as co-advisor. Wachtell, Lipton, Rosen, and Katz acted as legal counsel.
Ferrero Group was founded in Italy in 1946 and has global sales of more than $12 billion. It entered the U.S. market in 1969 with Tic Tac mints and owns Ferrero Rocher, Nutella, Kinder Joy, and Fannie May.