The Procter & Gamble Company (NYSE:PG) today announced an agreement to
divest its Snacks business to The Kellogg Company in a $2.7 billion
all-cash transaction. The companies expect to complete the deal in
summer of 2012. Final timing will be dependent upon receiving all
necessary regulatory approvals.
The prior agreement to sell the Pringles business to Diamond Foods has
been mutually terminated by P&G and Diamond as provided under the terms
of their agreements.
The sale of the Pringles business to The Kellogg Company creates
significant value for P&G shareholders. P&G expects an after-tax gain on
the transaction in the range of $1.4 billion to $1.5 billion, or
approximately $0.47 to $0.50 per share, approximately the same as was
estimated at the time of the initiation of the original transaction with
Diamond Foods in April, 2011. The Pringles business is an excellent
strategic fit for Kellogg, and it will significantly advance their goal
of building a global snacks business on par with its global cereal
business.
P&G's Chairman, President and Chief Executive Officer, Bob McDonald,
said: "This is an excellent development for P&G, Pringles and Kellogg,
creating value for our shareholders and representing an outstanding
opportunity for Pringles employees with a leading company in the Food
sector. Kellogg shares similar values and principles to us and we are
confident that the Pringles business will thrive under Kellogg's
leadership."
In conjunction with the announcement of the transaction with Kellogg,
P&G updated its financial guidance for fiscal year 2012. The Company
said the diluted earnings per share for the fiscal year will be
dependent on the timing of the completion of the transaction with The
Kellogg Company. Excluding the gain from the transaction, diluted net
earnings per share is expected to be in the range of $3.30 to $3.43. If
the Pringles sale is completed within the current fiscal year, diluted
net earnings per share is expected to be in the range of $3.77 to $3.93,
including the one time gain of $0.47 to $0.50 per share. P&G's prior
fiscal year guidance for diluted net earnings per share of $3.85 to
$4.08 per share included an estimated $0.55 to $0.65 per share one-time
gain from the Snacks transaction with Diamond Foods.
P&G said that, beginning with the January-to-March 2012 quarter, results
of the Snacks business will be classified and reported as discontinued
operations. As such, current and historical results will be excluded
from Core EPS and organic sales trends.