- Kellogg announced Thursday it agreed to acquire Ritmo Investimentos, the controlling shareholder of Parati S/A, Afical Ltda and Pádua Ltda, also known as "Parati Group," for $1.38 billion reais, or about $429 million at current exchange rates, all cash, according to a news release.
- Parati Group is the leading manufacturer of popular regional biscuit, powdered beverage and pasta brands in Brazil, including Parati, Pádua, Minueto, Zoo Cartoon and Hot Cracker biscuits.
- The deal marks Kellogg's largest acquisition in Latin America in the company's history and its fourth emerging market acquisition in the last two years.
Over the past two years, Kellogg has snapped up companies in each of its international regions, including Europe (Bisco Misr and Mass Food Group in Egypt) and Asia Pacific (a 50% stake in Multipro in Nigeria and Ghana).
This Parati acquisition builds upon Kellogg's emerging market growth strategy and presence in Latin America. This strategy differs somewhat from the domestic growth many of Kellogg's competitors have focused on in recent years. Once the acquisition is complete, emerging markets will account for about 15% of the company’s sales.
This strategy makes sense as domestic sales have slowed and the company pursues its goal of becoming an international snack producer. Cereal sales are down, so Kellogg has been investing in snack foods to offset those losses. The Pringles brand alone pulled in about 50% of sales last year.
Experts anticipate net sales for the Parati Group to hit about 600 million reais ($190 million at current exchange rates). Kellogg ended up acquiring Parati for a good price because Brazil's economy is dealing with a large recession. Had Kellogg purchased this company previously or waited until the economic fallout subsided, this acquisition could have had a much higher price tag.