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Kellogg’s splashes out on Brazilian biscuits maker

Thursday, October 13, 2016 4:45
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(Before It's News)

Breakfast cereals giant Kellogg Company (NYSE:K) is to acquire Brazilian biscuit maker Parati Group for the equivalent of US$429mln in cash.

Parati Group offers a wide range of iconic regional brands, including Parati, Pádua, Minueto, Zoo Cartoon and Hot Cracker biscuits, which make up roughly half of the company’s business; the rest is largely accounted for by “just add hot water” products.

The splurge by Kellogg will have ramifications for the US food group’s share repurchase program, which will be pared back to US$450-500mln of buy-backs this year, versus previous guidance of US$700-750mln.

Kellogg said the reduction of its share buyback scheme was to preserve financial flexibility, but the company promised shareholders that expected revenue and cost synergies should create financial value for share owners “relatively quickly”.

“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 of Kellogg Latin America.


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