US cereal maker Kellogg Co today struck a deal to buy Ritmo Investimentos, the controlling shareholder of Brazilian biscuit maker Parati Group, for about $429 million (1.38 billion reais) in cash.
This is Kellogg's fourth acquisition in emerging markets in the last two years, and its largest acquisition in Latin America, the company said in a statement.
To preserve financial flexibility, Kellogg said that it intends to reduce its expected share repurchases in 2016 to $450-550 million, from its previous guidance of $700-750 million.
"Brazil is the largest economy in Latin America and this acquisition will allow us to accelerate our growth and improve our margins in the region," said Kellogg CEO, John Bryant.
Parati Group offers a wide range of iconic regional brands, including Parati, Pádua, Minueto, Zoo Cartoon and Hot Cracker biscuits, which make up approximately half of the company's business. The rest of the business is comprises Trink powdered beverages, Parati Lamen instant noodles and Parati dried pasta.
Parati Group expects sales to be approximately 600 million reais ($190 million ).
Parati Group has 3,200 employees, including a salesforce of around 1,300 people serving 60,000 customers directly, five distribution centers and two production facilities.
"With its outstanding portfolio of popular consumer brands, Parati Group is an excellent strategic fit for Kellogg and our business in Latin America," said Bryant.
"Brazil is the largest economy inLatin America and this acquisition will allow us to accelerate our growth and improve our margins in the region. This means more growth for the core Parati Group business and our well-loved Kellogg brands."
"The combination of Parati's portfolio and sales and distribution capabilities with Kellogg's global resources – including innovation expertise, extensive shopper insights and customer marketing strength – provides tremendous opportunity. Bringing our companies together enables us to expand our footprint in a rapidly growing market," said Maria Fernanda Mejia, president, Kellogg Latin America.