Hostess Brands and Nutella owner Ferrero compete as front runners for Kelloggs Keebler, Famous Amos and Fruit Snack Companies. In a business that can value brands around $ 1.5 billion, people familiar with the situation say CNBC. 19659002] div> div.group> p: first child "/>
Negotiations begin as Hostess and Ferrero seek to benefit from restructuring in the food industry. Big-food companies are losing brands that have been neglected in favor of focusing on money-makers. Companies like Hostess and Ferrero are counting on them to revive these brands with appropriate investment and focus.
Both Hostess and Ferrero have last Thursday made offers for the brands of biscuits and fruit snacks. Other brands on sale include Murray's and Mother's Biscuits and Stretch Island Fruit Snacks. While other buyers are still in dispute, the two are considered as leaders, the people said. Every deal is still more than a week away, they said.
Hostess, which has a market capitalization of $ 1
The talks are coming as food companies like Kellogg, Campbell and Kraft Heinz reduce their portfolios to resources brands that can revive the businesses. Revenue growth has stalled across the industry, and food giants are taking more targeted measures to fend off emerging competitors such as Kind Bar and Beanitos chips. Simple size and cost efficiency are no longer the goal of Big Food brands.
"We need to make strategic decisions about our business, and these brands have had difficulty competing for resources and investments within our portfolio," said Kellogg CEO Steve Cahillane. A statement from last year when the planned divestments were announced.
Kellogg's market capitalization of $ 19.5 billion fell 11 percent last year. Kellogg managers pointed to Pringles, Cheez-Its, and Rice Krispies Treats as brands, reviving them with single-serving innovations and options.
Among the other Big Food brands that could possibly be won include Kraft-Heinz's Maxwell House and Kraft Heinz's cottage cheese business, which CNBC has reported, the ketchup giant is considering selling. General Mills and Conagra also said they are considering divestments.
Kellogg competitor Campbell Soup is nearing the end of another cookie deal.
In an effort to curtail its portfolio, Campbell sells its US-based fresh produce and Australian biscuits and biscuits, including Arnott's. The Australian company, which is valued at around $ 3 billion, received final offers last week, CNBC said. Oreo owner Mondelez is a leader in the brand, warned Mondelez still in competition with other companies and potential antitrust concerns.
Kellogg acquired Keebler in 2001 for $ 4.4 billion. Part of the draw was at the time the platform for the direct delivery of the cookie mark, through which employees sell their own products and do not ship them from warehouses. The so-called DSD gives a food company more control over the proper display in food and convenience stores. However, as the sale of products such as cookies goes down in stores, this is less economical. Kellogg has since discontinued the DSD distribution .