Kellogg Puts Keebler Integration on Fast Track
"By moving aggressively, we will help maximize the great potential of this acquisition," said David A. Mackay, executive vice president of Kellogg Company and president of Kellogg USA. "This is a unique opportunity to grow sales and profits and deliver increased value to our share owners. Our ability to act immediately is based on an exhaustive study of all our marketing and operating systems by teams of Kellogg and Keebler people."
Kellogg announced that it would:
• Move both Kellogg's Rice Krispies Treats squares and Kellogg's Nutri- Grain bars into Keebler's direct store door (DSD) delivery system by the third quarter of 2001. "This is a significant opportunity for growth and we are acting quickly to take advantage of it," Mackay said.
• Immediately begin hiring and deploying over 100 new sales representatives to further strengthen Keebler's direct store door (DSD) delivery system. This is in addition to 150 sales representatives already being added by Kellogg USA. "Having more Kellogg and Keebler people in stores will improve our execution and help accelerate our growth in the United States," Mackay said.
• Consolidate U.S. foodservice operations at Elmhurst, Illinois, under the leadership of Keebler's David Pfanzelter, who has been named president - foodservice, Kellogg USA. "Both Kellogg and Keebler bring strong foodservice operations to the new Kellogg Company, and this unification of effort will broaden our product line and account base in this high-potential business segment," Mackay said.
• Realign U.S. convenience foods production for greater efficiency, a move that will include the closing of Keebler's Denver, Colo., bakery by May 31, 2001, with a loss of about 470 positions. "While closing Denver is a critically important part of achieving savings and efficiency, we sincerely regret the impact on workers there and will provide a broad program of benefits and re-employment assistance," Mackay said. He said that, in addition to Denver, about 150 positions are being eliminated from the consolidation of headquarters and administrative functions. Employees impacted by these actions have been notified by the company.
Mackay said the Keebler division of Kellogg USA will continue to be based in Elmhurst. David B. Vermylen, who has been president of the Keebler Brands Division, is now president and chief executive officer of Keebler, as well as senior vice president of Kellogg Company.
"David Vermylen is both an outstanding leader and very familiar with Keebler operations, including its DSD system," Mackay said. "We are very pleased to have him on the Kellogg USA leadership team."
Mackay said Kellogg expects to achieve $170 million in annual cost synergies by the third year following the acquisition. In addition, he said, marketing and innovation opportunities in a broadened portfolio as well as leveraging DSD distribution should create incremental sales growth.
About Kellogg Company
With projected annual sales of more than $9 billion, Kellogg Company is the world's leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, frozen waffles, meat alternatives, pie crusts, and cones. The company's brands include Kellogg's, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, Murray, Austin, Morningstar Farms, Famous Amos, Carr's, Plantation, Ready Crust, and Kashi. Kellogg products are manufactured in 19 countries and marketed in more than 160 countries around the world. For more information, visit Kellogg's web site at http://www.kelloggs.com or Keebler's web site at http://www.keebler.com .
Forward-Looking Statements Disclosure
This news release contains forward-looking statements related to strategy, the integration of Keebler, cost synergies and savings, and sales and profit growth. Actual performance may differ materially from these statements due to factors related to the Keebler acquisition, including integration problems, failures to achieve synergies, unanticipated liabilities, and the substantial amount of indebtedness incurred to finance the acquisition (which could, among other things, hinder the company's ability to adjust rapidly, make the company more vulnerable to a downturn, and place the company at a competitive disadvantage to less-leveraged companies); competitive conditions and their impact; pricing and promotional spending; the effectiveness of marketing spending and programs; the success of new product introductions; the availability of and interest rates on short-term financing; commodity price and labor cost fluctuations; changes in consumer preferences; economic factors such as interest rates, statutory tax rates, and foreign currency translations; and other factors.
Source: Kellogg Company