EX-99.2 3 d300946dex992.htm FEBRUARY 15, 2012 INVESTOR PRESENTATION BY KELLOGG COMPANY. February 15, 2012 Investor Presentation by Kellogg Company.
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
®


Q&A