Kellogg’s is buying Pringles for $2.7 billion, increasing its reach in food sectors throughout the world.
The food giant announced its plans to buy Pringles from Procter & Gamble last Wednesday, following a failed attempt to buy Diamond Foods, the New York Times reports.
Procter & Gamble signed a deal with Diamond Foods agreeing to buy Pringles for about $2.4 billion, mainly in stock in April and Diamond, which had previously acquired Kettle potato chips, was looking forward to obtaining Pringle’s global presence and influence in the grocery market.
But the deal was delayed in the midst of a Diamond was accounting scandal, when questions were raised about how well it paid its walnut growers and by early February, Diamad announced it would be restating its financial statements and placing chief executive, Michael J. Mendes, and its chief financial officer, Steven M. Neil, on administrative leave.
Within hours, Procter & Gamble announced it was considering other options for Pringles.
Kellogg said it would be taking on $2 billion in debt through the new deal, adding to its existing $5 billion in long-term debt.
“We are excited to announce this strategic acquisition,” Kellogg’s chief executive, John A. Bryant said in a statement.
“Pringles has an extensive global footprint that catapults Kellogg to the number two position in the worldwide savory snacks category, helping us achieve our objective of becoming a truly global cereal and snacks company.”
In an interesting analysis on the state of the food industry in the US, the New York Times reports that Kellogg’s moves to advertise sugar and fat-laden foods as healthy is a worrying trend.
“We’re not happy with our performance the last couple of years,” Bryant admitted.
‘“Here I am, sitting in this office, and in that building, right there,” Mr. Bryant says, pointing to a plant just a few blocks away, “is one of the few private-label cereal plants in the U.S., probably creating 200 million pounds of cereal a year. Because that thing is there, we have to keep bringing new foods to consumers and delighting them, because if we stand still, people catch up,”’ the New York Times reports.
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