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Race for Kellogg’s cookie, fruit snacks businesses nearing the end

By Gill Hyslop contact

- Last updated on GMT

Kellogg's cookie brands. Pic: Kellogg's
Kellogg's cookie brands. Pic: Kellogg's

Related tags: Twinkie, Ferrero, Keebler, Famous Amos, Murray's, Mother's, Stretch Island, M&A, Flowers foods, Hostess brands

Twinkie-maker Hostess Brands and Ferrero are reportedly the frontrunners in the race to buy Kellogg’s Keebler, Famous Amos, Murray and Mother’s cookie businesses, as well Stretch Island fruit snacks business, in a roughly $1.5bn deal.

Earlier this year, BakeryandSnacks reported the cereal giant was exploring the ‘potential divestiture’ of its ‘cookie, fruit snacks, ice-cream cones and pie-shells businesses’.

Both Hostess and Ferrero have purportedly submitted final offers.

Sources close to the deal said Hostess – which has a market capitalization of $1.2bn – is considering acquiring the Keebler cookie business through a Reverse Morris Trust (RMT) to sweeten the deal, which will allow Kellogg to sell off unwanted assets without incurring tax obligations on gains arising from the sale.

The Michigan-based cereal giant acquired US biscuit and cracker business Keebler from Flowers Foods in March 2001 for $4.4bn to move it offerings from the breakfast table to afternoon snacks.

Another draw was the cookie brand’s direct-store-delivery (DSD) platform, which Kellogg has since dropped.

Once completed, the sale will certainly go a long way to help Kellogg recover from a fourth-quarter loss of $84m,​compared to the year prior, due to a ‘softeness’ in its key US snacks and morning foods categories.

Sources added any deal is still likely more than a week away.

Related topics: Cakes & Pastries, Snacks, Manufacturers

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