BATTLE CREEK, Mich.,
Oct. 13, 2016 /PRNewswire/ --
Tweetable Highlights:
- .@KelloggCompany to acquire Parati Group, leading manufacturer
of iconic biscuit, powdered beverage & pasta brands in
Brazil
- .@KelloggCompany expands emerging market presence w/ addition
of Parati Group, largest acquisition in Lat Am in company
history
- With acquisition of Parati Group, @KelloggCompany marks major
emerging market acquisition in each of its int'l regions
Kellogg Company (NYSE: K) today announced it has entered into an
agreement to acquire Ritmo Investimentos, controlling shareholder
of Parati S/A, Afical Ltda and Pádua Ltda ("Parati Group"), a
leading Brazilian food group. The acquisition, the company's
largest in Latin America, furthers
two of Kellogg's strategic
priorities — becoming a global snacking
powerhouse and expanding its presence in emerging markets.
Parati Group offers a wide range of iconic regional brands,
including Parati, Pádua, Minueto, Zoo Cartoon and Hot Cracker
biscuits, which make up approximately half of the company's
business. The rest of the business is comprised of Trink powdered
beverages, Parati Lamen instant noodles and Parati dried pasta.
Parati Group Net Sales are expected to be approximately
R$600 million (or about US$190 million at current exchange rates).
"With its outstanding portfolio of popular consumer brands,
Parati Group is an excellent strategic fit for Kellogg and our
business in Latin America," said
John Bryant, Kellogg Company
Chairman and CEO. "Brazil is the
largest economy in Latin America
and this acquisition will allow us to accelerate our growth and
improve our margins in the region. This means more growth for the
core Parati Group business and our well-loved Kellogg brands."
Parati Group has 3,200 employees, including a salesforce of
approximately 1,300 people serving about 60,000 customers directly.
This includes a strong presence in small to medium – or
high-frequency – retail stores in Brazil, which are critical to reaching the
country's growing population. The company also has five
distribution centers and two production facilities with room for
expansion.
"The combination of Parati's portfolio and sales and
distribution capabilities with Kellogg's global resources –
including innovation expertise, extensive shopper insights and
customer marketing strength – provides tremendous opportunity.
Bringing our companies together enables us to expand our footprint
in a rapidly growing market," said Maria
Fernanda Mejia, President, Kellogg Latin America.
"Parati Group has built a very successful business over the past
four decades and we have a great deal of admiration and respect for
them," continued Mejia. "They are highly entrepreneurial and strive
to provide great-tasting foods consumers love while also fulfilling
their founder's legacy. We are thrilled to welcome Parati Group to
the Kellogg family."
Today's announcement marks Kellogg's fourth emerging market
acquisition in the last two years. In that time, Kellogg has
acquired companies in each of its international regions, including
Europe (Bisco Misr and Mass Food
Group in Egypt) and Asia Pacific (a 50 percent stake in Multipro
in Nigeria and Ghana). The addition of Parati further
enhances the company's emerging market growth strategy.
Financial Details of the Transaction
The acquisition by Kellogg, through its subsidiary Pringles
Serviços e Comércio de Alimentos Ltda, is subject to customary
closing conditions and is expected to close in late 2016. The
purchase price is R$1.38 billion, or
roughly US$429 million at current
exchange rates, and it will be an all-cash transaction. To
preserve financial flexibility, Kellogg intends to reduce its
expected share repurchases in 2016 to $450-550 million, versus previous guidance of
$700-750 million.
The profitability of this business, along with expected revenue
and cost synergies, should create financial value for shareowners
relatively quickly, even accounting for an initially reduced level
of share repurchases. In 2016 and 2017, it is expected to be
neutral to Comparable-basis EPS, depending on exchange rates, with
only a slight impact on Reported EPS because of one-time costs of
$(0.01) per-share in both
years. The acquisition is expected to be accretive on both
Comparable and Reported EPS in 2018 and thereafter.
About Kellogg Company
At Kellogg Company (NYSE: K),
we strive to make foods people love. This includes our beloved
brands – Kellogg's®, Keebler®, Special K®, Pringles®, Kellogg's
Frosted Flakes®, Pop-Tarts®, Kellogg's Corn Flakes®, Rice
Krispies®, Cheez-It®, Eggo®, Mini-Wheats® and more – that
nourish families so they can flourish and thrive. With 2015 sales
of $13.5 billion and more than 1,600
foods, Kellogg is the world's leading cereal company; second
largest producer of cookies, crackers and savory snacks; and a
leading North American frozen foods company. Through our
Breakfasts for Better DaysTM global hunger
initiative, we've provided more than 1.4 billion servings of cereal
and snacks to children and families in need around the world. To
learn more, visit www.kelloggcompany.com or follow us on Twitter
@KelloggCompany, YouTube and on Social K.
Forward-Looking Statements Disclosure
The
"forward-looking statements" contained herein inherently involve
risks and uncertainties that could cause actual results to differ
materially from those predicted in those statements, including the
realization of the anticipated benefits from the acquisition of
Parati, projections concerning the company's share repurchases,
sales, operating profit and earnings, and the other factors
discussed in the risk factors section of Kellogg Company's most
recent annual report on Form 10-K. Investors are cautioned not
to place undue reliance on any such forward-looking statements,
which speak only as of the date they were made. The Company
undertakes no obligation to update them publicly.
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SOURCE Kellogg Company