• by Thom Forbes  @tforbes, February 16, 2012

The analysts seem to like what they see when they crunch the numbers of Kellogg’s deal yesterday to acquire Pringles from Procter & Gamble, but it has more to do with the possibilities it opens for Battle Creek for future ventures into the world of snacks than it does with the chips off the old block in a canister.

“Bank of America Merrill Lynch says Kellogg is playing offense with the deal, and has found a Jeremy Lin-like great fit, writes Davis Benoit in the Wall Street Journal.  “Pringles is a great fit, expands [Kellogg’s] international reach and strengthens its snack business particularly in the U.S. and U.K.”

Pringles are, at the same time, uniform in appearance and rather idiosyncratic in conception. Can you imagine what the world would be like if every Corn Flake looked exactly like the last one? Or if Leo Burnett’s advertising for Frosted Flakes over the years had been as cookie-cutter and unmemorable as Pringles has been, Brad Pitt notwithstanding? Or if Rice Krispies had toyed with its simple delectability the way Pringles has in recent years by nearly obliterating the original taste of its wheat starch, flours and salt delivery vehicle (only 42% potato-based says Wikipedia) with the likes of Screamin’ Dill Pickle Pringles and Mexican Layered Dip varieties?

Quite simply, Kellogg’s snacks business -– the likes of Cheez-It and Keebler's Club crackers -- is growing faster than its breakfast cereals, Julie Jargon and Gina Chon, with assists from Paul Ziobro and Emily Glazer, report in the Wall Street Journal. It all started with the purchase of Keebler a dozen years ago. With the latest acquisition, which is expected to close over the summer, snacks will constitute 40% of Kellogg's sales mix (or more, some say) -- the same proportion as cereal. Frozen foods will account for the remaining 20%.

Kellogg CEO John Bryant tells the Journal: "We love the cereal business. It's a long-term growth business. This is an add for us -- it's not running away from anything."

Rather, Jargon & Colleagues observe, the deal allows Battle Creek to brings its snacks to markets such as Europe, Asia and Latin America. And, point out the AP’s Candice Choi and Michelle Chapman in the Detroit Free Press, the $2.7-billion deal will instantly make Kellogg’s the world's second-biggest savory snack maker behind PepsiCo's Frito-Lay. Another AP story, in the Washington Post, lists the major brands of the two competitors. They also go head-to-head in cereal, of course, with Frito-Lay having acquired Quaker Foods in 2001.

Kellogg is just following consumers as they trek from the fields to factories and call centers in emerging nations around the world, indicates Standard & Poor's analyst Tom Graves to Choi and Chapman. “When you have people moving to the cities and becoming urbanized, they're less likely to eat foods they grow themselves," he points out. "There's a bigger opportunity to sell packaged foods."

“P&G's decision to sell to Kellogg follows a failed effort by Diamond to acquire Pringles,” as Tiffany Hsu reports in the Los Angeles Times, in a deal valued at $2.35 billion. That agreement fell apart after Diamond “admitted that it had wrongly accounted for payments to walnut growers and would have to restate its 2010 and 2011 financial statements.” P&G said Diamond's disclosure was "very disappointing" but Kellogg quickly stepped in.

Folks in Battle Creek, and elsewhere, who might be worried that Kellogg’s affection for its heritage products is waning, needn’t worry.

"Cereal remains a core focus of the company," Bryant tells the Battle Creek Enquirer’s John C. Sherwood. "It's one of the two big platforms we have globally. We intend to grow the business long-term, so this is not a signal that we want to contract our cereal business."

Writes Sherwood: “That may allay concerns in the local community that the company's breakfast-cereal heritage” might erode over time. If approved, he points out, the deal will affect 1,700 Pringles employees and plants in Tennessee and Belgium, and about 150 in Cincinnati.

The news seems to have created less of a splash in Cincinnati, in fact, where the Enquirer’s David Holthaus tersely reports that P&G chairman and CEO Bob McDonald briefed the media at The Westin downtown yesterday morning. "This is an excellent deal for Pringles, Kellogg and our shareholders," according to McDonald, who added that "we had a lot of interest from other parties." And that’s about it, along with some numbers.

“On Wednesday, it looks like investors are starting to bake some of this growth into Kellogg’s stock price, which has severely lagged the gains” of competitors, writes Matt Andrejczak on Market Watch’s “The Tell” blog. “Now it’s up to Kellogg to execute,” he concludes.

Isn’t that always the case? Or, in this instance, should we say “the canister”?

Thursday Trivia Bonus:“Dr. Fredric J. Baur was so proud of having designed the container for Pringles potato crisps that he asked his family to bury him in one,” Rebecca Goodman reports in the Cincinnati Enquirer of May 31, 2008.