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Kellogg Company Expands in South America With $430 Million Acquisition

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Kellogg Company Expands in South America With $430 Million Acquisition

Kellogg Company Expands in South America With $430 Million Acquisition
October 19
14:26 2016

Kellogg Company is acquiring a controlling shareholding in Parati, a leading Brazilian food group. The acquisition, Kellogg’s largest in Latin America, furthers two of its 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(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,” says John Bryant, chairman and chief executive of Kellogg Company. “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 sales force 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 acquisition by Kellogg 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

The deal 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.

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