Kellogg has announced a joint venture agreement with African consumer products firm Tolaram to "significantly expand" its presence in Africa.
The deal sees the creation of a joint venture between Kellogg and Tolaram Africa to develop snacks and breakfast foods for the West African market.
As part of the agreement, Kellogg has acquired 50% of Multipro, a sales and distribution company in Nigeria and Ghana. Kellogg has also secured the right to acquire a stake in Tolaram Africa Foods in the future. Tolaram owns 49% of Dufil Prima, which manufactures several food brands including Indomie breakfast noodles, Minimie snacks, Power oil and Power pasta.
"As a region that is experiencing explosive growth, with a population of almost one billion people and an economy that is expected to more than double over the next ten years, sub-Saharan Africa provides tremendous opportunity for our company," said John Bryant, chairman and CEO of Kellogg.
"Tolaram has a great track record of building beloved consumer brands, including the market leader Indomie noodles, and fuelling their growth. This partnership is an excellent strategic fit for Kellogg."
Kellogg agreed to pay US$450m for a 50% stake in Multipro. The company is headquartered in Lagos and provides access to approximately 1,000 distributors. It operates 19 warehouses across six locations.
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"Kellogg's well-known and iconic brands and our research and development expertise, combined with Tolaram's strong local sales, marketing, supply chain and distribution capabilities, positions us to become a breakfast and snacks leader in a thriving market," said Amit Banati, president for Kellogg's operations in Asia Pacific.
Kellogg said it expects that reported earnings per share excluding transaction and integration costs will not be affected by the transaction in 2015 or 2016; the company expects slight earnings accretion in 2017. It does expect that costs associated with the transaction will lower reported earnings in the third quarter of 2015 by approximately $0.01 per share.