P&G Update: Kellogg to Acquire Pringles For $2.7 Billion

by Trefis Team
+4.80%
Upside
141
Market
148
Trefis
PG
Procter & Gamble
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After terminating its deal with Diamond Foods, Procter & Gamble (NYSE:PG) has now entered into an agreement with the Kellogg Company, to offload its Pringles snacks business for $2.7 billion in cash. The transaction is expected to be completed by mid-2012, after regulatory approvals. The deal marks the final part of P&G’s exit from the food business to focus on high-growth, high-margin personal care brands.

See full Trefis analysis for P&G here

Terminates Previous Deal With Diamond Foods

P&G had initially agreed to sell Pringles to Diamond Foods in April 2011 for $2.35 billion, involving $1.5 billion in stock exchange and $850 million of debt assumption by the end of 2011, which was then postponed to mid-2012. P&G opted out of the deal in the aftermath of Diamond Foods’ recent internal accounting investigations regarding irregularities related to crop payments made to walnut growers, which resulted in the Diamond stock losing more  than 60% value and the recent exit of its CEO and CFO.

Pringles is the second largest global savory snack business, with annual sales exceeding $1.5 billion.

The current Trefis price estimate for P&G’s stock is $71.50, a 10% premium over the market price.

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