Kellogg Co. (NYSE: K) agreed to buy Parati Group, a Brazilian maker of biscuits, pasta and powdered beverages, for 1.38 billion reais ($430 million) in its largest purchase in Latin America.
The all-cash acquisition is expected to be completed late in 2016, Battle Creek, Michigan-based Kellogg said in a statement. To preserve financial flexibility, Kellogg said it’s reducing its 2016 share buyback program to $450 million to $550 million from a previous range of $700 million to $750 million.
This is Kellogg’s fourth acquisition in emerging markets in the past two years as the maker of Froot Loops and Special K cereals looks for growth abroad. The company in 2015 bought a 50 percent stake in Nigerian food distributor Multipro for $450 million to help expand in Africa. Parati’s products include Hot Cracker biscuits, Trink powdered beverages and Parati dried pasta. Emerging markets, such as Latin America, have been creating attractive investment opportunities for companies.
Kellogg is expanding in Brazil as the country goes through its deepest recession on record. The real has weakened against the U.S. currency each of the past five years, so Kellogg is paying a lower price in dollars than it would have previously. Finance Minister Henrique Meirelles said that Brazilians will start to see the benefits of an economic recovery in 2017.