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Kellogg To Sell Keebler Cookies And Related Businesses To Ferrero For $1.3 Bln

Kellogg Co. (K) said Monday that it has agreed to sell selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses to the Ferrero Group and its related companies, an Italy-based global confectionary group, for $1.3 billion, or 1.16 billion euros, in cash.

The transaction includes brands and assets primarily related to these businesses. Subject to customary closing conditions, the 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. 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," said Steve Cahillane, Kellogg's Chairman and Chief Executive Officer.

The divestiture represents a portion of Kellogg's North America snacking business. Specifically, it includes its cookies business, including brands like Keebler, Mother's, Famous Amos, Murray's, and Murray's Sugar Free, as well as cookies manufactured for Girl Scouts of the U.S.A. It also includes its fruit and fruit-flavored snacks, pie crusts, and ice cream cones businesses.

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

The transaction includes production facilities in Augusta, Georgia; Florence, Kentucky; Louisville, Kentucky; Allyn, Washington; and Chicago, Illinois.

In 2018, these businesses recorded net sales of nearly $900 million and operating profit of about $75 million, including estimated indirect corporate expenses.

Kellogg said that assuming the cash proceeds are used only to reduce outstanding debt, the transaction is expected to be less than 5 percent dilutive to its projected 2019 currency-neutral adjusted earnings per share.

Founded as a family business in Alba, Italy in 1946, Ferrero is the third-largest company in the global chocolate confectionary market, with global sales of over $12 billion, distribution across over 170 countries, and a workforce of more than 30,000 people across 55 countries.

Ferrero entered the U.S. in 1969 with Tic Tac breath mints and is now also known for products including Ferrero Rocher fine hazelnut chocolates, Nutella The Original Hazelnut Spread, Kinder Joy, and Fannie May chocolates.

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