KELLOGS ACQUIRED PRINGLES

1. KELLOG ACQUIRED PRINGLES
Presented by
NIKHIL GROVER
140701048

3. About Kellogg Company
• Kellogg Company (also Kellogg's, Kellogg, and Kellogg's of Battle
Creek) is an American multinational food manufacturing company
headquartered in Battle Creek, Michigan, United States.
• Kellogg's was founded as the Battle Creek Toasted Corn Flake
Company on February 19, 1906, by Will Keith Kellogg.
• Kellogg Company is the world's leading producer of cereal, frozen
foods.
• Second largest producer of cookies and crackers.

4. • Kellogg's largest factory is at Trafford Park in Manchester United
Kingdom, which is also the location of its European headquarters.
• well-loved brands - produced in 18 countries and marketed in more
than 180 countries these brands include Cheez-It®, Coco Pops®, Corn
Flakes®, Eggo®, Frosted Flakes®, Kashi®, Keebler®, Kellogg's®, Mini-
Wheats®, Pop-Tarts®, Pringles®, Rice Krispies®, Special K®, and many
more.
• and - through the May 2012 acquisition of the iconic Pringles business
- the world's second largest savory snacks company.

5. About Pringles
• Pringles is the world's second largest player in savory snacks, spread across
more than 140 countries.
• The snack was originally developed by Procter & Gamble (P&G), who first
sold the product in 1967. P&G sold the brand to Kellogg's in 2012.
• Easily identified by its unique saddle shape and distinct packaging, and with
more than 80 flavors.
• Snack lovers worldwide have made Pringles a snack aisle favorite for more
than four decades.
• "The Pringles team embodies the same values and passion for growth that
have driven the people of Kellogg for more than a century,
• The cereal company's $2.7 billion deal with Procter & Gamble Co. to buy
Pringles potato crisps aims to satisfy a hunger for more diversification and
instantly makes it a player in overseas snacking.

6. Acquisition
• Kellogg bought Pringles chip brand from Procter & Gamble for $2.7
billion in may 31, 2012,
• Iconic ~$1.5 billion brand –is now second largest at Kellogg
• Highly incremental to US and international businesses
• Potentially expands the reach of Kellogg brands-Savory-snack category
growing in both developed and emerging markets
• Game changer internationally
• Provides entry into warehouse-distributed snack category
• World-class manufacturing capability

7. • Provides new innovation platform –flavors, packaging, forms
• Financially attractive
• Iconic global snack brand
• #2 in savory snacks globally
• Distribution in 140 countries
• Platform for future innovation
• Strong in-store positioning
• World-class manufacturing and supply chain

8. Strengths
• Leading market position built on strong brands aided with robust
advertising
• Strong market innovation creates sustainable growth
• Strong results in tough economic and macro environment enhances
investor confidence
Weaknesses
• Lack of scale compared to peers
• Dependence on few customers for major portion of revenues
• Product recalls hampering brand image

9. Opportunities
• Emerging markets providing ladder for growth
• Growing organic foods market
• Strategic agreements and acquisitions
Threats
•Stringent regulations
•Soft consumer spending in mature markets of the United States and Europe
•Intense competition and changing global retail scenario

13. • It also closes a chapter at consumer goods business Procter & Gamble
which has been trying to find a buyer for Pringles, its only remaining
food business, for several years
• to leave them better able to focus on their core non-food brands, like
Ariel, Pantene and Gillette.
• They were seeing a continued squeeze on prices for suppliers – from
cash conscious consumers and retailers under pressure to make
margins – and many of them are selling off brands to focus on best-
selling lines
P & G was looking for it

14. Financial
• Acquisition for $2.695 billion in cash
• Attractive Price:adjusted for tax benefits and working capital
• Kellogg borrowed $2 billion to complete the deal and expected to limit its
share repurchase program for about two years.
• Excluding one-time costs and the impact of reduced buybacks, the deal
added 8 to 10 cents per share to Kellogg's earnings in 2012
• Transaction funded with cash on hand and committed financing-Maintain
strong investment-grade rating
• Good use of international cash, low rates of financing
• Total one-time costs are expected to be between $160 -180 million.

15. • Identified on-going synergies of $50 – 75 million.
• Dilutive To EPS By $0.11-0.16 In 2012 Including one-time Costs And
Changes To share-repurchase Program Slightly Accretive To EPS In
2013 Including one-time Costs And Changes To Share Repurchase
program.
• The acquisition, which first was announced on April 5, subject to
regulatory approval by competition authorities in various jurisdictions
outside the United States.

16. Kellogg Acquired Pringles Business with Supply
Chain Synergy Opportunities
• Pringles dominant presence lies among mass merchandising (48
percent), grocery (25 percent) and convenience (12 percent).
• Kellogg on the other hand has a current high presence in grocery with
some mass merchandising, but lacks any substantial global presence.
Pringles immediately added such presence, bringing along a world
class manufacturing and supply chain capabilities, including
production presence in the U.S. Europe and Asia, and a distribution
presence among 140 countries

17. THANK YOU