BATTLE CREEK, MI -- Kellogg Co. said it will buy Procter & Gamble's Pringles business for $2.7 billion after a similar agreement between P&G and Diamond Foods was called off.
P&G's deal with Kellogg comes a week after Diamond announced it was replacing its chief executive and CFO after an internal investigation that found that Diamond improperly accounted for payments to walnut growers. The company said it now needs to restate two years of financial results. Diamond's stock fell following those announcements, which hurt its ability to finance the Pringles' deal. | SEE STORY
Following last week's news, Cincinnati-based P&G said it was reevaluating the $1.5 billion sale of Pringles to the Stockton, CA-based maker of Emerald Nuts and Pop Secret Popcorn, announced by the two companies last April. P&G even stated that Pringles had "attracted considerable interest from other outside parties." On Feb. 15, the companies said they mutually agreed to end their arrangement and Kellogg quickly made an offer.
By adding Pringles to its growing portfolio, Kellogg, which makes Keebler cookies and Cheez-It crackers, will gain a global snack brand with $1.5 billion in annual sales.
"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," said Kellogg president and chief executive John Bryant. PepsiCo is currently the No. 1 savory snack company with brands like Frito Lay.
Kellogg said it expects to complete the Pringles acquisition this summer.