Kellogg Buys Pringles for $2.7 Billion
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Kellogg said Wednesday it will borrow $2 billion to complete the purchase, and plans to limit its share repurchase program for about two years.
Diamond Foods (NASDAQ:DMND) was in talks to buy Pringles in April, but the deal was delayed by an accounting investigation. The deal with Kellogg will be completed by this summer, said P&G.
Procter & Gamble’s after-tax gain from the deal will be $1.4 billion to $1.5 billion, or 47 to 50 cents per share, the same as estimated when it first announced its deal with Diamond last year.
Pringles, which does about $1.5 million in annual sales, is expected to add 8 to 10 cents a share before the impact of the deal on Kellogg’s 2012 earnings. Including one-time costs, the deal will lower Kellogg’s earnings per share by 11 to 16 cents this year.
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