DA Davidson Sees $500M Add to Kellogg's North America Snack Business with Pringles Acquisition
In the report, DA Davidson writes, "The deal is expected to be $0.08-$0.10 accretive to 2012 EPS, excluding one-time costs and the lack of share repurchases. We had expected Kellogg's share repurchases to benefit EPS by almost that amount for the full year,so the impact to EPS is roughly neutral. 2012 will see approximately $10 million in synergies and $60-$70 million in one-time costs – on a reported basis the deal would be $0.11-$0.16 dilutive to 2012 EPS. Longer term, Kellogg expects one-time costs of $160-$180million over three years, and an annual run rate of $50-$75 million in synergies. Pringles is expected to be slightly accretive to 2013 EPS on a reported basis, including one-time costs. Kellogg will have a TSA with P&G."
DA Davidson maintains its Neutral rating and $55 price target on Kellogg, which is currently trading up $2.76 from yesterday's $50.30 closing price.
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