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INTERNATIONAL

Kellogg Co enters agreement to acquire RXBAR maker Chicago Bar Company
Monday, 09 October, 2017, 08 : 00 AM [IST]
Kellogg Company has entered an agreement to acquire Chicago Bar Company LLC, maker of RXBAR, a line of clean-label protein bars made with delicious, whole food ingredients and the fastest-growing nutrition bar brand in the United States. RXBAR will continue to operate independently as a standalone business, and will be able to leverage Kellogg’s scale and resources to continue driving its growth.

“RXBAR is a unique and innovative company. Its values, people and cutting-edge approach represent an exciting opportunity for our business,” said Steve Cahillane, chief executive officer, Kellogg Company.

“Adding a pioneer in clean-label, high-protein snacking to our portfolio bolsters our already strong wholesome snack offerings,” he added.

“RXBAR is an excellent strategic fit for Kellogg as we pivot to growth,” said Cahillane.

“With its strong millennial consumption and diversified channel presence, including e-commerce, RXBAR is perfectly positioned to perform well against future food trends,” he added.

With a base of egg whites, fruit and nuts encased in iconic packaging, each RXBAR provides 12g of protein in 210-220 calories. RXBARs don't compromise on taste, nutrition or convenience, making them great pre- and post-workout snacks, in-between meals, or quick, on-the-go breakfast options.

They are available in eleven different flavours, with additional seasonal and limited-time varieties, and are distributed in the United States. The company recently launched RXBAR Kids, which contain the same core ingredients as RXBARs, but in kid-friendly flavours and portions.

“We carefully considered who the right partner would be for RXBAR’s future. We have always been committed to delivering the highest quality products that taste great, and being radically candid and transparent with our consumers, and these priorities remain,” said Peter Rahal, chief executive officer and co-founder, RXBAR.

“Joining Kellogg is not only a great cultural fit, but it provides us with the tools and resources to accelerate our growth so the brand can scale even faster than it is today,” he added.

“The RXBAR team has built an incredible business, with impressive growth and profitability. Our focus will be on helping to drive the brand’s continued growth,” said Paul Norman, president, Kellogg North America. She added, “We’re excited to welcome the RXBAR team to Kellogg.”

Financial details
The acquisition by Kellogg is subject to customary closing conditions and is expected to close by the end of 2017. The purchase price is $600 million, or approximately $400 million net of tax benefits.

Growing rapidly, RXBAR’s net sales are expected to be approximately $120 million in 2017.

The company expects the multiple on projected 2018 earning before interest, taxes, depreciation and amortisation (EBITDA) to be in the range of 12-14 times, inclusive of the tax benefits to the purchase price. Excluding one-time costs, this acquisition is expected to be immaterial to the earnings per share (EPS) in 2017 and 2018.

Disclosure of forward-looking statements
The forward-looking statements contained herein inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in those statements, including the realisation of the anticipated benefits from the acquisition of RXBAR, projections concerning the company’s share repurchases, sales, operating profit and earnings, and the other factors discussed in the risk factors section of Kellogg Company’s most recent annual report on Form 10-K.

Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they were made. The company undertakes no obligation to update them publicly.
 
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