Why Kellogg Just Sold a Smorgasbord of Beloved BrandsFrom cookies to fruit snacks and pie crusts, the consumer-goods giant just divested some of its biggest products.
Here’s what investors need to know.
Steve Symington (TMFSymington)
Apr 3, 2019 at 3:35PM
In today’s ever-evolving consumer-goods landscape, it’s hard to overstate the importance of building recognizable brands. But on Monday, Kellogg (NYSE:K) announced a deal to pare its industry leadership in that area, selling a significant slice of its snacking business to global confectionary company Ferrero Group for $1.3 billion in cash.
More specifically, Kellogg will divest brands (and their respective production facilities) including Keebler, Mother’s, Murray’s, Famous Amos, and cookies manufactured for the Girl Scouts, as well as all of its fruit snacks, pie crusts, and ice-cream cone businesses.
Together, this enviable portfolio achieved net sales of almost $900 million last year — a meaningful chunk of its $13.5 billion in total 2018 sales — generating an operating profit of $75 million.
This raises the question: Why was Kellogg willing to part with those products in the first place?…