Utilis Industries to acquire Kellogg for $29 billion
DENVER, BATTLE CREEK - Looks like Toucan Sam was for sale after all.
Battle Creek, Mich.-based Kellogg Company announced today that it had accepted a friendly offer of approximately $29 billion from Denver, Colo.-based Utilis Industries, the private holding company owned by billionaire Anonus Utilis. The all-cash deal, coming a day after the news of H.J. Heinz and Kraft Foods' blockbuster merger, values the company at $82 a share, a 30% premium over yesterday's closing price.
Upon the closing of the transaction, Kellogg will become a wholly-owned subsidiary of Utilis Industries, the vehicle through which Mr. Utilis also controls ABC Warner, the media conglomerate created last year through the combination of ABC Inc with Time Warner in the largest all-cash buyout to date. ABC Warner already deals with Kellogg; the company sells a cereal based on Hanna-Barbera's Scooby-Doo, the most prominent property of the ABC-owned animation studio. But conversely, the fate of Post's Pebbles cereals, whose packaging features H-B's Flintstones characters, is now up in the air.
It is speculated that Utilis may want to combine Kellogg, the maker of such prominent brands as Frosted Flakes, Froot Loops, Keebler, Kashi, Cheez-It and Pringles, with another major player in the food sector. But Utilis is coy about who exactly that player might be. The current Kellogg executive team will stay on board at least in the near-term; Kellogg CEO John Bryant has signed a year-long contract, effective at the close of the buyout, and will receive a $20 million severance package if he is dismissed before the contract ends. Utilis will also be less involved in the operations of Kellogg than he is with ABC Warner, where he serves as CEO and Chairman.
"Truth be told, I have long wanted to buy into the food business," said Utilis. "It's not glamorous, but it is stable. People want and need to eat." Despite this statement, Utilis and Bryant must deal with woes at Kellogg; sales of the company's flagship cereals are down as consumers shift towards healthier fare, and the company can't keep pace with competitors such as General Mills, which benefits from a more diverse portfolio of products than what Kellogg offers and has been swifter in keeping up with changing tastes, having acquired the Annie's organic food company in September. Kellogg acquired the natural cereal maker Kashi in 2000, but a series of PR flaps have lowered the brand's cachet in recent years. It is easy to argue that it is these woes in the first place that made Kellogg a takeover target. But Utilis doesn't intend to let Kellogg fester.
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Comments
He might do a porno for the right price, however
Please fix this
this is a problem since I usually do something (like type) whilst eating
not even making this up, I really liked peanut butter