Kellogg’s is currently refocussing its efforts on its higher selling products and has taken steps to trim the weight by selling off some of their cookies and snacks brands like Famous Amos and Keeblers to Ferrero for $1.3 Billion. Kellogg’s businesses generated close to $900 million last year, according to reports that have been divulged by the company. The transaction will be an all-cash one and is going to occur by the end of July. As a part of the deal, Ferrero will also acquire 6 manufacturing units that are located in the US and a facility that is based in Baltimore too.
According to the CEO, Mr. Steve Callihane, this is an extremely strategic decision that has been taken by their team. “Divesting these great brands wasn’t an easy decision,” He also said that it “will lead to reduced complexity, more targeted investment, and better growth.”
Kellogg’s had already announced all the way back as last year that they were looking for buyers for their business. Ferrero has also been on a buying spree to further diversify its business.
The Executive Chairman of Ferrero, Mr. Giovani Ferrero, also commented on the new acquisition. He said “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,”
Steve Callihane was appointed as the CEO of Kellogg’s in 2017 and since then, the company has been seeing major shifts internally. Their priority has shifted to increasing their sales instead of focusing on the declining ones.
Back in 2001, Kellogg bought Keebler for $4 Billion. The company had talked about how divesting their funds “would take a big portion of the sales out of our portfolio, but its sales that are declining replaced by sales that are growing.”
Ferrero had also bought Nestle’s candy businesses last year for $ 2.8 Billion. They had bought the brands Baby Ruth and Butterfinger from Nestle during this deal. Sources also say that the Ferrero is interested in more acquisitions.