Kellogg to buy Procter & Gamble’s Pringles Group for $2.7bn

Kellogg has agreed to buy Procter & Gamble’s Pringles potato chip business for $2.7 billion, the companies said on Wednesday.

Procter & Gamble had originally intended to sell Pringles to Diamond Foods, but a Securities and Exchange Commission probe into Diamond’s accounts led to the deal collapsing.

More from GlobalPost: Diamond Foods removes CEO and CFO following improper accounting

Best known for its range of breakfast cereals, Kellogg says the deal will make it the second largest player in the global snacks industry.

“The Pringles business enhances Kellogg Company’s existing production capabilities with the addition of two world-class manufacturing facilities, one in Tennessee and one in Belgium,” the company said in a statement.

Pringles are on sale in more than 140 countries, with annual sales of around $1.5 billion, according to the BBC. It has manufacturing operations in the US, Europe and Asia.

Kellogg’s brands include Corn Flakes, Keebler, Eggo and Cheez-It. The all-cash deal is expected to be completed by mid-2012, subject to regulatory approval, the Agence France Presse reported.

The buy was applauded by investors, who sent Kellogg's shares up 3.9 percent in opening trade on Wednesday. Procter & Gamble was up 0.4 percent. Kellogg expects Pringles to add 8-10 cents to its per-share earnings this year, excluding deal-related costs, according to The New York Times.

The company also hopes to achieve at least $10 million in cost savings in 2011, a number that it expects to grow. 

More from GlobalPost: New Old Spice ads poke fun at P&G's history of sexist advertising