991006 Kellogg to Buy "Veggie Burger" CompanyOctober 2, 1999Battle Creek, MI - Kellogg Co. said it would buy vegetarian and health foods maker Worthington Foods Inc. for about $307 million, opening the door to a new growth area as its dominant cereal franchise faces intense competition. Under the agreement, Kellogg will pay $24 a share for Worthington's 12.8 million outstanding shares, a 67% premium over Worthington's closing Nasdaq stock price on Thursday of $14.375. The deal is expected to close by the end of the year. For Kellogg, best known for Rice Krispies and Frosted Flakes, the deal gives it a booming new business line at a time when it has seen its share of the mature cereal market shrink. Kellogg said it will invest in new products, marketing and sales of Worthington lines. "This acquisition creates a new high-growth earnings stream for Kellogg Co.," Carlos Gutierrez, Kellogg's president and chief executive, said in a statement. "We are committed to expanding this business and building the customer base." Worthington's sales are expected to top $170 million this year, up more than 20% from 1998. Worthington specializes in manufacturing and marketing meat alternatives, such as veggie burgers and meatless sausages and hot dogs. The Worthington, Ohio-based company's brands include Morningstar Farms, Natural Touch, Worthington and Loma Linda. Kellogg, which had 1998 sales of $6.8 billion, on Thursday scheduled a conference call for Friday morning to "review new developments related to Kellogg's growth strategy." Analysts had speculated the company would announce either an acquisition or a new product. In early trading Friday morning on the New York Stock Exchange, Kellogg shares moved down 18.75 cents to $37.25.
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