Earlier this year, BakeryandSnacks reported the cereal giant was exploring the ‘potential divestiture’ of its ‘cookie, fruit snacks, ice-cream cones and pie-shells businesses’.
Both Hostess and Ferrero have purportedly submitted final offers.
Sources close to the deal said Hostess – which has a market capitalization of $1.2bn – is considering acquiring the Keebler cookie business through a Reverse Morris Trust (RMT) to sweeten the deal, which will allow Kellogg to sell off unwanted assets without incurring tax obligations on gains arising from the sale.
The Michigan-based cereal giant acquired US biscuit and cracker business Keebler from Flowers Foods in March 2001 for $4.4bn to move it offerings from the breakfast table to afternoon snacks.
Another draw was the cookie brand’s direct-store-delivery (DSD) platform, which Kellogg has since dropped.
Once completed, the sale will certainly go a long way to help Kellogg recover from a fourth-quarter loss of $84m, compared to the year prior, due to a ‘softeness’ in its key US snacks and morning foods categories.
Sources added any deal is still likely more than a week away.