Pringles: A Unique Growth Opportunity for Kellogg February 15, 2012 ® Exhibit 99.2 |
Forward-Looking Statements This presentation contains, or incorporates by reference, “forward-looking statements” with projections concerning, among other things, the acquisition of the Pringles® business, the Company’s strategy, and the Company’s sales, earnings, margin, operating profit, costs and expenditures, interest expense, tax rate, capital expenditure, investments, dividends, cash flow, debt reduction, share repurchases, costs, brand building, ROIC, working capital, growth, new products, innovation, cost reduction projects, and competitive pressures. Forward-looking statements include predictions of future results or activities and may contain the words “expects,” “believes,” “should,” “will,” “will deliver,” “anticipates,” “projects,” “estimates,” or words or phrases of similar meaning. The Company’s actual results or activities may differ materially from these predictions. The Company’s future results could also be affected by a variety of factors, including the ability to complete the acquisition of the Pringles® business, the impact of competitive conditions; the effectiveness of pricing, advertising, and promotional programs; the success of innovation, renovation and new product introductions; the recoverability of the carrying value of goodwill and other intangibles; the success of productivity improvements and business transitions; commodity and energy prices; labor costs; disruptions or inefficiencies in supply chain; the availability of and interest rates on short-term and long-term financing; actual market performance of benefit plan trust investments; the levels of spending on systems initiatives, properties, business opportunities, integration of acquired businesses, and other general and administrative costs; changes in consumer behavior and preferences; the effect of U.S. and foreign economic conditions on items such as interest rates, statutory tax rates, currency conversion and availability; legal and regulatory factors; including changes in food safety, advertising and labeling laws and regulations; the ultimate impact of product recalls; business disruption or other losses from war, terrorist acts or political unrest; and other items. Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update them. 2 2 |
Transaction Summary Kellogg to acquire Pringles snack business from Procter & Gamble for $2.695 billion in cash – Purchase price represents ~11x LTM EBITDA and ~9x net of tax benefits and liabilities Exciting expansion of Kellogg’s existing global snack business Expected to be EPS accretive in the first full-year (a) Transaction targeted to close by June 30, 2012, subject to regulatory approvals a) Excluding one-time costs and other purchase accounting adjustments. 3 |
Iconic ~$1.5 billion brand – will be second largest at Kellogg Highly incremental to US and international businesses – Potentially expands the reach of Kellogg brands – Game changer internationally – Provides entry into warehouse-distributed snack aisle – World-class manufacturing capability Provides new innovation platform – flavors, packaging, forms Financially attractive Compelling Strategic Rationale 4 |
Iconic global snack brand – #2 in savory snacks globally (a) – Distribution in 140 countries Platform for future innovation Strong in-store positioning World-class manufacturing and supply chain FY11 Sales $1.5bn, EBITDA $243mm Sources: Company filings, Wall Street research, Euromonitor. a) Based on Euromonitor 2010 retail sales. b) (Pringles) Consumer Market Knowledge (CMK). Global Retail Sales ($2.5bn) (a) U.S. Retail Channel Mix (b) Pringles Will Make Us Stronger Mass 48% Grocery 25% Club 4% Other 11% C-Store 12% 5 |
7,130 3,758 2,972 2,464 2,067 2,025 1,397 1,288 1,151 1,100 Lay's Doritos Cheetos Pringles Ruffles Tostitos Walkers Calbee Planters Fritos Top 10 Brands – Retail Sales ($ in millions) Source: EuroMonitor. Category Share (%) 8.6% 4.5% 3.6% 3.0% 2.5% 2.4% 1.7% 1.6% 1.4% 1.3% Pringles Positioned for Continued Growth Savory-snack category growing in both developed and emerging markets Large target markets; $48bn and $15bn of retail sales in developed and emerging markets, respectively Premium positioning, particularly outside the U.S., with leading brand awareness Proven ability to customize product to local tastes 6 9.6% 4.3% Developed Emerging Savory-Snack Global Growth (’05 - ’10 CAGR) |
Strong Fit with Our Existing North American Snacks Platform More than $4 billion business Delivering solid MSD growth Strong innovation pipeline with such products as Special K Cracker Chips 7 ® |
Provides Scale and Access to Markets 8 Pringles doubles Kellogg’s International Snack business Kellogg present in 180 countries, Pringles in 140 Enhanced scale in key developed markets Potential in key complementary markets ® |
Builds Snacks Platform 2011E – Before/After the Inclusion of the Pringles Business 9 North America Retail Cereal North America Retail Snacks International Cereal North America Frozen & Specialty Channels International Snacks North America Retail Cereal North America Retail Snacks International Cereal North America Frozen & Specialty Channels International Snacks |
Financial Highlights Acquisition for $2.695 billion in cash Attractive Price: – 1.7x LTM Sales – ~11x LTM EBITDA, ~9x adjusted for tax benefits and working capital 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 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 10 |
The New Kellogg $15bn Company with a collection of leading brands #1 global cereal business #2 global biscuit business #2 global savory snack business Growing North American frozen food business Global operations in more than 180 countries 11 ® |
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