Kellogg Co., Battle Creek, Mich., on Oct. 26 announced an agreement to acquire Keebler Foods Co., Elmhurst, Ill., for about $3.6 billion in a deal that will create a food company with $10 billion in annual sales. Kellogg will pay $42 a share and assume the leading cookie and cracker marketer's debt. The deal, entered into with Keebler and its majority shareholder, Flowers Industries, is expected to reduce but not eliminate Kellogg's reliance on the increasingly commodity-oriented cereal business, said Credit Suisse First Boston analyst Dave Nelson. Ideally, Mr. Nelson said, the transaction would bring Keebler's strong branding skills to Kellogg, where such prowess has been lacking. Keebler spent $20 million in measured media last year on its various Keebler products, according to Competitive Media Reporting. Leo Burnett
USA, Chicago, also a roster agency for Kellogg, handles advertising for Keebler. The deal is expected to close during the first
Copyright October 2000, Crain Communications Inc.