Kellogg agrees $1.3 billion cookie sale with Nutella-maker Ferrero
U.S. food group Kellogg Co has agreed to sell its Keebler biscuits brand and other assets to Nutella maker Ferrero for $1.3 billion (992.59 million pounds) as it focuses on its core cereals and snacks businesses.
The deal comes as packaged food companies struggle to adjust to changing consumer tastes and rising demand for low-sugar, healthier items. Kellogg’s fruit-flavoured snacks, pie crusts and ice-cream cones businesses will also pass to the Italian confectioner as part of the deal.
Monday’s transaction is Ferrero’s fourth acquisition in the Unites States since 2017 as it looks to expand in a key market for chocolate and biscuits, an area where it is growing rapidly.
Giovanni Ferrero, Executive Chairman of the Ferrero Group, said in a statement that the Kellogg businesses were an excellent strategic fit for the family-owned group.
Next month Ferrero is expected to launch a new Nutella-filled biscuit in France, further expanding the reach of its chocolate and hazelnut spread, which was launched in 1964 by Giovanni’s father Michele Ferrero.
“Ferrero is investing in the biscuit business because this category accounts for a significant portion of consumption of sweets outside the meal, a sector next to Ferrero’s core business,” said Marco Eccheli, director at the Italian unit of consulting firm AlixPartners.
He added that the deal would also boost the Italian company’s negotiating power with big U.S. retail chains.
The businesses being sold by Kellogg had net sales of nearly $900 million in 2018, the U.S. food group said, adding that the deal, which is expected to close by the end of July, will reduce 2019 adjusted earnings per share by less than 5 percent.
Ferrero, which was founded in the northern Italian town of Alba in 1946, is on an aggressive acquisition campaign under the leadership of Giovanni Ferrero, who took over the company following his father’s death in 2015.
The group, best known for its Ferrero Rocher pralines and Tic Tac mints, has been buying neglected brands from big food companies, aiming to revive them through investment and innovation.
Last year it bought Nestle’s U.S. confectionary business, having acquired Ferrara Candy and Fannie May chocolate group in 2017.
As a result of those deals, Ferrero’s revenue reached $12 billion in the fiscal year ended in August 2018.