This week, food giant Kellogg (K: Charts, News) acquired the iconic Pringles potato crisp brand from Procter & Gamble (PG: Charts, News) for $2.7 billion. The acquisition was completed announced after a proposed $1.5 billion offer from Diamond Foods (DMND: Charts, News) fell through. The acquisition of the Pringles brand is expected to be mutually beneficial for both Kellogg and Procter & Gamble. The majority of Kellogg's brands are bound to the North American domestic market, and it has been looking to add globally exposed brands, such as Pringles, to expand its presence in emerging markets. Meanwhile, Procter & Gamble has been shedding its food product lines, of which Pringles is the final one, in favor of focusing on its core household products. The acquisition is expected to complete over the summer. Diamond Foods escaped the deal without penalty, to the relief of many investors, who had worried that a potential kill fee in the tens of millions would be enforced. Daily Chart The Pringles acquisition makes Kellogg - which had been primarily known for its sweet breakfast items such as Frosted Flakes and Eggo waffles - the world's second-largest snack maker behind Pepsico's (PEP: Charts, News) Frito-Lay division. The addition of Pringles strengthens Kellogg's portfolio of salty snacks, which also include Cheez-It and Keebler's Club crackers. Pringles has a strong presence in over 150 countries, earning 2/3 of its $1.5 billion in annual revenues from overseas markets, and strengthens Kellogg's position in an increasingly urbanized world where "on-the-go" snack foods are gaining popularity, especially in China. Pringles was first introduced to the market over four decades ago, and its iconic cylindrical packaging and saddle-shaped chips are instantly recognizable to shoppers worldwide. Kellogg also gains 1,700 Pringles employees. Kellogg CEO John Bryant welcomed the new additions to the workforce, stating, "Their collective passion and commitment has resulted in Pringles' well-deserved acclaim as one of the most recognized brands in the world." Bryant also emphasized the cohesion of the brands. "Pringles has an extensive global footprint that catapults Kellogg to the number two position in the worldwide savory snacks category," he stated, "helping us achieve our objective of becoming a truly global cereal and snacks company." Kellogg also gains two new manufacturing facilities, one in Tennessee and another in Belgium, from Pringles. The deal, however, comes with some risks for Kellogg shareholders. First, the massive acquisition is expected to increase the company's outstanding debt by $2 billion. To offset this debt, the company plans to limit share repurchases to employee option exercises for the next two years. One-time costs from the acquisition are forecast between $160 million to $180 million - with $70 million to $90 million realized in 2012, and the remainder realized in 2013 and 2014. Looking ahead, the company may readjust its previous fiscal 2012 guidance of 4% to 5% net sales growth, if Pringles causes any unforeseen acquisition indigestion. If the deal closes by June 30, as anticipated, Pringles will become accretive to Kellogg's earnings in the second half of the year by 8 to 10 cents per share, and 11 to 16 cents per share in 2012, excluding the aforementioned one-time charges. Pringles is then forecast to generate synergies of $10 million in 2012, and expects that number to grow substantially to as much as $75 million annually by 2014. Kellogg is considered a strong defensive income stock, and has consistently increased its dividend since 1987. Shares currently trade at 14 times forward earnings, but its 5-year PEG ratio of 2.2 suggests slow share price growth ahead. However, the company's 43 cent quarterly dividend, which is a yield of 3.4%, remains the stock's main draw. Other News About K Kellogg to Buy Procter & Gamble's Pringles for $2.7 Billion Kellogg expands into emerging markets with Pringles. Diamond Foods calls off Pringles acquisition Diamond Foods escapes the canceled deal unscathed. Other Stocks in the News GM books record annual profit General Motors continues to impress investors. Why Zynga Will Never Be Great Again Has Zynga's time passed as the king of social gaming? Copyright 2011 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. 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