Bank of America Reiterates Buy, $55 PO on Kellogg

Bank of America maintains its Buy rating with a target price of $55 on Kellogg

following announcement of Pringles acquisition. Bank of America says, "Key first impressions: 1) Pringles is a great fit, expands K international reach and strengthens its snack business particularly in the US and UK; 2) $2.7b deal value is above the $2.35b value that Diamond foods was prepared to pay. Based on previous information weestimate a trailing EBITDA multiple of 10x -11x. Including tax benefits will drive the multiple closer to 9x; 3) K expects the deal to be $0.08 and $0.10 accretive in 2012 excluding one time costs; 4) Synergies are expected to be $50m to $75m per year once completed, this compares to the $25m that Diamond Food expected; 5) Diamond foods will not be liable for paying a breakup fee to PG." K closed at $50.30 yesterday.